Electricity, EU agreement for market reform
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Encourage investments in cleaner energies – which according to Brussels includes nuclear power – and obtain beneficial effects on consumer bills. This is the meaning of the EU agreement on the electricity market, announced in a statement by the EU Council.
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by Luca Pagni
The agreement, concluded after a night of difficult negotiations between MEPs and member states, “will help stabilize markets in the long term and accelerate the spread of renewable and non-fossil energy”, said Spanish Energy Minister Teresa Ribera, whose country holds the rotating presidency of the EU.
The agreement arrived shortly after four in the morning on the basis of the negotiations between Parliament and the EU Council and on the proposal from the European Commission dating back to 14 March.
The central element of the reform is the introduction of financing instruments for renewable and zero-carbon energy, including nuclear, making electricity prices less dependent on the volatility of fossil fuel prices. The agreement confirms direct public support for the production of renewable electricity (wind, solar, tankless hydro, geothermal) and nuclear energy through a two-way contract for difference, in which producers are paid a fixed “strike price” for their electricity, regardless of the price in short-term energy markets.
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edited by Federico Formica
Contracts for difference are intended to promote investment in new electricity installations only, but Member States can support existing systems with contracts for difference if they are subject to repowering, life extension or capacity expansion (and this applies also for nuclear power plants).
As for capacity mechanisms, i.e. the generation incentive tools available to Member States to counteract potential electricity shortages, the agreement provides that Member States can financially support capacity provision structures. The idea is to transform them from an emergency solution to a structural component of the EU’s energy supply.
Under pressure from the Council and in particular from Poland, the exception was maintained according to which until the end of 2028 it is possible to finance coal-fired or gas-fired power plants already in operation that emit emissions above the emission standard (more than 550 g of CO2 per KWh). As also foreseen in the Commission’s proposal, consumers will have the free choice to stipulate fixed price contracts (minimum duration of one year) and flexible price contracts. Unilateral price increases in fixed-price fixed-term contracts will be prohibited and the ban on power cuts for people affected by energy poverty will also be retained.
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