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Electricity market reform: What exactly is a contract for difference?

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Electricity market reform: What exactly is a contract for difference?

The European Union’s 20-year-old electrical energy market is heading for a revamp.

The market suffered its worst yr on file in 2022 after gasoline costs spiralled uncontrolled and pushed electrical energy payments to unsustainable ranges, bringing huge monetary misery to European households and corporations.

The upheaval was blamed on Russia’s invasion of Ukraine and the Kremlin’s manipulation of power provides, which created widespread volatility and rampant hypothesis.

Though costs have since then gone down, the disaster continues to be latent and loads of query marks stay on the EU’s capability to deal with the following winter.

To keep away from a repeat of the 2022 chaos, the European Fee has proposed a reform of the EU electrical energy market and requested legislators to deal with the file as a prime precedence.

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The reform, nonetheless, is just not the elemental overhaul that some international locations, like France and Spain, have demanded and as a substitute focuses on focused adjustments to the present guidelines.

One of many primary components within the draft plan is the so-called contract for distinction (CfD), a sort of long-term contract that’s seen as underdeveloped throughout the bloc.

By comparability, in the UK, CfDs have been allotted since 2014.

In contrast to a business deal, a contract for distinction is signed between an electrical energy producer and a state authority for a interval of as much as 15 years. The signatories negotiate a spread – or hall – inside which electrical energy costs can freely fluctuate.

However here is the place issues get extra fascinating: if market costs fall beneath the hall, the state is required to compensate the producer, successfully paying out the business losses.

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If, however, market costs exceed the hall, the state is entitled to seize the excess revenues earned by the producer and use the additional money to assist households and corporations.

For this reason the European Fee refers to those contracts for distinction as “two-way” as a result of they work each when costs go up and when costs go down.

Redistribution instruments

Below the proposed reform, two-way CfDs will develop into obligatory for brand new tasks in renewable electrical energy and nuclear crops – however provided that subsidies are concerned.

Renewables typically require an enormous upfront funding to pay for gadgets, resembling wind generators and photo voltaic panels, and their set up on the bottom. These lofty bills can deter traders from going into the renewable sector, notably in the event that they really feel their monetary contribution is not going to repay as anticipated.

The Fee argues contracts for distinction may also help persuade hesitant traders by performing as a assure that revenues will stay secure and constant over time.

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However CfDs are usually not meant to artificially regulate electrical energy charges and easily present redistribution instruments to offset extraordinary worth swings available in the market.

“Solely in occasions of power crises you want further safety,” stated Bram Claeys, a senior advisor on the Regulatory Help Venture (RAP), a non-partisan organisation devoted to the inexperienced transition.

“(Two-way) CfDs can supply a supply of revenue for governments to alleviate the influence on shoppers when costs are excessive.”

Furthermore, it is necessary to notice that CfDs represent state support due to the compensation that governments should pay producers when energy costs go down. If this compensation drags on, state budgets can come beneath stress and problem the viability of those particular preparations.

That is why the Fee recommends member states design CfDs with an “upward limitation” that may stop exorbitant compensation utilizing taxpayers’ cash.

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Moreover, the chief urges “penalty clauses” for producers who, upon seeing their surplus revenues being captured by the state, want to get out of the contract earlier than the termination date.

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EBU woes deepen as political parties excluded from EU election debate

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EBU woes deepen as political parties excluded from EU election debate

The broadcaster says only parliamentary groups fielding a lead candidate in June’s election can be represented at the televised stand-off.

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The European Broadcasting Union (EBU) is under further scrutiny after it was accused by two political parties of excluding them from its Eurovision election debate.

The far-right Identity and Democracy (ID) party and the regionalist, separatist European Free Alliance (EFA) both say they have been intentionally shunned by the organisers of the debate, set to take place at the European Parliament in Brussels on May 23 ahead of June’s European elections.

In correspondence seen by Euronews, the ID Party – which harbours the likes of France’s Rassemblement National, Italy’s Lega and Germany’s Alternative für Deutschland and which forms its own group in the European Parliament – was told by the EBU that it could not be represented at the debate because it had not fielded an official lead candidate, known as Spitzenkandidat, for the ballot.

The Spitzenkandidat process requires all major European parties to select a lead candidate to bid for the role of president of the European Commission, the bloc’s powerful executive arm. But the process has been notoriously spurned in the past, with current president Ursula von der Leyen parachuted to the role in 2019 despite not officially running.

In a letter addressed to European Parliament President Roberta Metsola, also seen by Euronews, the ID group’s co-chairs claim the EBU’s rules are inconsistent. Other parties fielding more than one lead candidate, which ID says also “goes against” the principle of the Spitzenkandidat, have been invited to the debate.

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Renew Europe, which is fielding three lead candidates, will be represented by Sandro Gozi, while the Greens, who have two lead candidates, will send Terry Reintke to the televised stand-off.

The EBU says that it sent invitations to parties from the seven political groups in the European Parliament and made clear that the Eurovision debate was a “forum for lead candidates for the position of European Commission President” under the Spitzenkandidat system.

“Two parties, the ECR and ID, declined to nominate a lead candidate and have therefore made themselves ineligible for this particular debate,” the Geneva-based broadcasting union said in a statement shared with Euronews.

ID has urged President Metsola to weigh in and urge the EBU to retract the decision and allow MEP Anders Vistisen of the far-right populist Danish People’s Party to participate on behalf of the group. 

The EBU debate is one of three electoral debates taking place ahead of June’s vote. Vistisen represented the ID group in the Maastricht debate held in April while Maylis Roßberg took part on behalf of the EFA. 

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EFA also criticises its exclusion

The European Free Alliance (EFA), home to Europe’s regionalist and separatist parties, also published a statement on Tuesday alleging it had been deliberately excluded from the debate.

The party sits along with the Greens as part of the Greens/EFA group in the European Parliament. According to the EBU, its rules mean only one candidate from each of the parliament’s seven political groups can take place in the debate, in this case the Greens’ Terry Reintke.

“In coordination with the European Parliament, the EBU invited political parties in the European Parliament to nominate one Lead Candidate from each of the 7 official political groups represented,” the EBU told Euronews in a statement.

“The parties within those groups made the selection of the lead candidate. For the Group of the Greens/European Free Alliance, the lead candidate put forward was Terry Reintke, from the party of European Greens,” it adds.

EFA has nominated two lead candidates for June’s election, 23-year-old Roßberg from the Danish-German border region and Catalan independentist Raül Romeva, a former MEP sentenced to a 12-year prison term in 2019 on charges of sedition, but pardoned by Spanish prime minister Pedro Sánchez in 2021.

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In its statement, EFA claims that the parliament’s spokesperson Jaume Duch had asked the party to nominate a responsible contact person for discussions with the EBU in January and that a kick-off meeting was held, but that no communication was then received.

It says that the rules limiting speakers to one lead candidate per political group were communicated to them on 30 April 2024, and denounces the EBU for its “lack of communication and transparency.”

“We want to express our deepest disappointment and unconformity with this decision. European democracy deserves more. By shutting the door on our participation, the EBU is not only silencing the voices of smaller parties but also undermining the principles of democracy and inclusivity,” the party said. 

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The EBU maintains that its rules were made clear to all parties, and that it looks forward to a “successful and meaningful political debate at a crucial time for European politics.”

Both the ID group and the EFA are calling on the EBU to rectify its decision.

Adding fuel to fire

The allegations come just a day after the European Commission censured the EBU’s decision to ban EU flags at the Eurovision Song Contest in Malmö, Sweden over the weekend.

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Commission Vice-President Margaritis Schinas sent a letter to the broadcaster on Monday asking for the “rationale” behind the ban and for it to attribute “responsibility where it is due”.

The EBU said its decision was linked to “heightened geopolitical tensions” around the song contest, during which pro-Palestinian protesters marched against the participation of Israel due to its ongoing offensive in the Gaza Strip.

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Mapping Russia’s Sudden Push Across Ukrainian Lines

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Mapping Russia’s Sudden Push Across Ukrainian Lines

All of a sudden, Russian forces are making progress in many directions at once.

In recent days, Russian troops have surged across the border from the north and opened a new line of attack near Kharkiv, Ukraine’s second-largest city, capturing settlements and villages and forcing thousands of civilians to flee.

Sources: Institute for the Study of War with American Enterprise Institute’s Critical Threats Project, Ukrainian officials

The New York Times

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It may be a feint. The real goal may be to divert already-weakened Ukrainian forces from critical battles elsewhere. But one thing is clear: The map of battle in Ukraine looks a lot different today than it did only a week ago.

Ukraine is more vulnerable than at any time since the harrowing first weeks of the 2022 invasion, a range of soldiers and commanders have said in interviews.

It is too soon to know if the war in Ukraine has hit a turning point. But Russia’s progress isn’t just in the northeast.

Russia has been making small but geographically broad gains across the eastern front. And what started as a modest Russian advance near Avdiivka has grown in recent weeks into a roughly 15-square-mile bulge that is complicating the defense of the Donetsk region.

Sources: Institute for the Study of War with American Enterprise Institute’s Critical Threats Project, Ukrainian officials

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The New York Times

Months of delays in American assistance, a spiraling number of casualties and severe shortages of ammunition have taken a deep toll, evident in the exhausted expressions and weary voices of soldiers engaged in daily combat.

Whether Russia will succeed in weakening Ukraine’s defenses in other parts of the front line remains to be seen.

A big objective, according to Franz-Stefan Gady, a Vienna-based military analyst, appears to be to draw Ukrainian forces away from Chasiv Yar, a town on strategic high ground where Ukrainians have fought for weeks to stave off an attack.

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Russia’s broad range of attacks appears to be stretching Ukrainian forces thin. Gen. Kyrylo Budanov, the head of Ukraine’s military intelligence agency, said in an interview from a bunker in Kharkiv this week that it has been difficult to find the personnel to shore up defenses in the northeast.

“All of our forces are either here or in Chasiv Yar,” he said. “I’ve used everything we have. Unfortunately, we don’t have anyone else in the reserves.”

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US military constructs hulking metal pier amid Biden's $320 million gamble to get aid into Gaza

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US military constructs hulking metal pier amid Biden's $320 million gamble to get aid into Gaza

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The U.S. military has completed the construction of a hulking metal pier that is expected to be jabbed into a beach in northern Gaza in the coming days, officials said.

Completing the massive makeshift structure — approximately 1,500-ft long or the length of five U.S. football fields — is the first step in the Biden administration’s two-month-long, $320 million gamble to open a sea route to get humanitarian aid through the eastern Mediterranean and into Gaza, where Israel continues to wage war with the Hamas terror group.

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The construction of the new floating pier and causeway is risky for President Biden and the Pentagon as aid delivery teams face unknown dangers and uncertainties as they attempt to work around the challenges of getting aid into Gaza through the Rafah border.

“In the coming days, you can expect to see this effort underway. And we are confident that we will be able to, working with our NGO partners, ensure that aid can be delivered,” Maj. Gen. Pat Ryder, the Pentagon press secretary, said Tuesday, noting humanitarian groups were ready for the first shipments through the new U.S. maritime route.

REPUBLICAN SAYS BIDEN HAS ‘STRENGTHENED’ HAMAS BY WITHHOLDING AID FROM ISRAEL: ‘COMPLETELY INCOMPETENT’

In this image provided by the U.S. Army, soldiers assigned to the 7th Transportation Brigade (Expeditionary) and sailors attached to the MV Roy P. Benavidez assemble the Roll-On, Roll-Off Distribution Facility (RRDF), or floating pier, off the shore of Gaza in the Mediterranean Sea on April 26, 2024.  (U.S. Army via AP)

The administration’s effort to open the additional sea route comes as the intensifying war between Israel and Hamas has neared the land crossings in Rafah.

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Scott Paul, an associate director of the Oxfam humanitarian organization, described the sea route as “a solution for a problem that doesn’t exist” because land crossings could bring in all the needed aid, he said.

Paul suggested the amount of aid that is allowed to be delivered into Gaza is dependent on Israeli officials allowing it. Some officials have expressed concerns the aid could fall into the hands of Hamas, the very terrorists that Israel is seeking to eliminate from the Palestinian territory.

UN REVISES GAZA DEATH TOLL, ALMOST 50% LESS WOMEN AND CHILDREN KILLED THAN PREVIOUSLY REPORTED

“Like all of the land crossings, it comes down to the consent of the government of Israel,” Paul said. “If Israel is comfortable with allowing the maritime corridor to function … then it will work in a limited way. And if they don’t, it won’t. Which is why it’s a very, very expensive alternative.”

A photo of the floating pier

The pier is part of the Army’s Joint Logistics Over The Shore (JLOTS) system which provides critical bridging and water access capabilities. (U.S. Army via AP)

Ophir Falk, foreign policy adviser to Israeli Prime Minister Benjamin Netanyahu, said Tuesday that the country had enabled the entrance of thousands of aid trucks into Gaza and would continue to do so.

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Falk accused Hamas of disrupting aid distribution by hijacking and attacking convoys.

The Israeli military said in a statement Tuesday that it will keep acting in line with international law to distribute aid to Gaza. It also has previously said there are no limits on aid.

 

Israeli Prime Minister Benjamin Netanyahu pledged to Biden to allow in more aid and safeguard those workers.

Trucks carrying aid and supplies

U.S.-military-backed construction crews in the eastern Mediterranean created a hulking metal dock, completing the first part of the Biden administration’s $320 million effort to open a sea route to get humanitarian aid into Gaza. (AP Photo/Leo Correa)

Anastasia Moran, an associate director for the International Rescue Committee, a global humanitarian group, said truckloads of aid entering Gaza increased by 13% last month.

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The Israel-Hamas war has been particularly lethal to Palestinian civilians residing in Gaza with Palestinian health officials estimating more than 35,000 have been killed. Israeli officials estimate the number of deceased civilians is approximately 16,000 civilians. A U.N report from May 8 found the number of women and children killed so far in the war to be just under 13,000.

The Associated Press contributed to this report.

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