EU countries split on upcoming electricity market reform

Seven European Union international locations have warned the bloc’s government to not suggest an enormous overhaul of the electrical energy market when it unveils its reform plan subsequent month.

Over the previous month, the European Fee has carried out public consultations on its deliberate electrical energy market reform that goals to make the bloc’s electrical energy costs much less correlated to the worth of fossil fuels, and notably fuel. It’s anticipated to unveil its proposal in March.

The reform was deemed crucial after Russia’s invasion of Ukraine and Moscow’s choice to largely cease fuel deliveries to the EU in retaliation for sanctions which led to a spike in costs that put European customers and companies below extreme financial pressure.

It’s because the worth of electrical energy within the EU is at present set by the most costly energy supply used to generate it, often fossil fuels and fuel particularly.

In a letter revealed on Monday as the general public consultations got here to an finish, Denmark, Estonia, Finland, Germany, Latvia, Luxembourg, and the Netherlands, stated that “any reform going past focused changes to the present framework needs to be underpinned by an in-depth affect evaluation and shouldn’t be adopted in disaster mode.”

“It’s essential that makes an attempt to handle the problem of inexpensive electrical energy costs and safety of provide don’t endanger the decarbonisation efforts and well-functioning of the electrical energy market,” they wrote.

They backed the creation of extra interconnections, higher storage capability, and making it simpler for customers to decide on between dynamic and fixed-price contracts.

The seven international locations stated they had been in opposition to plans to increase a brief windfall tax on non-gas turbines, writing that they “might compromise traders’ confidence within the wanted investments” to spice up the transition to renewable sources which is estimated to price €487 billion yearly between 2021 and 2030.

They stated as a substitute that such measures “needs to be voluntary” and “not be imposed retroactively.”

These positions are in stark distinction to different international locations, together with France and Spain — whose electrical energy technology is essentially powered by nuclear and renewables respectively.

Spain, as an illustration, championed a “basic reform of the EU electrical energy market” in a non-paper launched in late February and seen by Euronews. 

They need the electrical energy market to go from “an energy-only to an vitality and capability market based mostly on long-term contracts in an effort to guarantee costs according to common prices, safety of provide and incentives for renewables, storage and demand administration.”

“The expertise of 2022 exhibits that (the) present electrical energy market design turns into extremely dysfunctional with excessive pure fuel costs. 

“In reality, (the) present EU electrical energy market is just not match for top worth and unstable episodes in commodity markets leading to costly and unsustainable support programmes to comprise vitality payments for customers or the implementation of short-term mechanisms as profitable because the ‘Iberian Answer’ in Spain,” it added.