Electricity market design is a central political issue in 2023. In an environment of record-breaking electricity prices driven by a gas supply shock and below-average electricity generation, reforming the design of the European electricity market is seen as a means to delink consumer costs from volatility in short-term power markets.
The European Commission has promised to address these through market design changes. From September 2022 onwards, the European Commission has worked on different actions that could be adopted to mitigate the impact of high energy prices, such as direct support, reduction of VAT on energy bills and moving the cost of renewable support scheme away from energy bills.
Following a public consultation in early 2023, a plan to reform the EU’s electricity market design was published on 14 March 2023. The proposal has now passed to the Council and the European Parliament for debate and negotiation under the normal legislative procedure. The Commission’s goal is to be ready before the next winter period.
The plan is to revise the rules for electricity market design and for improving the EU protection against market manipulation in the wholesale energy market. This can be done by way of using more long-term contracts, such as power purchase agreements, and investment support should be structured as two-way contracts for difference. The aim is to better protect consumers, accelerate the deployment and better integration of renewables in the energy system, but also to enhance protection against market manipulation stability and predictability of the cost of energy and thereby contribute to the competitiveness of the EU industry.
Another objective of the reform is to introduce peak shaving opportunities for utilities and more ‘flexibility’ in the market by requesting EU countries to define national objectives for demand-side response and storage.
It remains to be seen what the consequences of all these proposed measures are going to be for buyers and sellers in the European electricity markets.
These and several other topics will be discussed during this highly interactive workshop.
The March 14 Proposal
- Current Status
- The Way forward
- Impact energy crisis
- For consumers
- Hourly baseload PPAs under threat
- Shorter tenors
- Different bids utilities and corporates
- Key Market principles
- Market-based prices;
- Equality of technologies;
- Enhance flexibility;
- Independence of NRAs
- Marginal pricing
- Promote renewables
- Different types of retail contracts
- Consumers sharing electricity
- Consumer protection
- Peak Shaving
- Flexibility Support
- Long Term Contracts
- Forward Pricing Hubs
- CfDs for support schemes
Proposed REMIT Market manipulation Rules
- Changed to some definitions
- Manipulating benchmarks
- Individuals could also be guilty
- Publication on IIPs
- New rules on algo trading
- On-site inspection right for ACER (Dawn raids)
Final Q &A Discussion