On Monday 24 April, EPICO KlimaInnovation hosted a hybrid panel discussion with Konrad-Adenauer-Stiftung Europe. The event focused on the proposal of the European Commission and the potential measures to be implemented, a dive in depth into the various perspectives and provided a better understanding of the advantages and drawbacks of the tabled options, to ultimately make better sense of potential developments of the future electricity market design.
Moderated by Klaus-Dieter Borchardt, European Commission Policy Officer Ms Baránska started the panel discussion by detailing the Commission’s Electricity Market Design proposal. MEP Ms Carvalho, shadow rapporteur for the reform (EPP, Portugal) provided the internal discussion’s roadmap, and announced the prioritisation of consumer protection, security of supply, and maintaining price signals for an improved functioning of the market.
ENTSO-E Secretary General Ms Twohig also highlighted the importance of preserving a correct functioning of the market, the need to encourage PPAs, to not regulate the use of CfDs, and to improve transparency.
Drawing from the EMD proposal, EPICO CEO Dr Weber questioned the interrelation between CfDs and PPAs, what specific design the Commission envisions for CfDs, and whether these would be the only direct support mechanism allowed for member states. Dr Weber finally expressed that PPAs should be encouraged across member states, especially for SMEs.
- Welcome Remarks: Dr Hardy Ostry – Head of the European Office of Konrad-Adenauer-Stiftung (KAS)
- Moderation: Klaus-Dieter Borchardt – Senior Associated Advisor, EPICO
- Aleksandra Baránska – Policy Officer, Internal Energy Market, DG ENER
- Maria da Graça Carvalho – MEP, European Parliament (EPP, Portugal)
- Sonya Twohig – Secretary-General, ENTSO-E
- Dr Bernd Weber – CEO, EPICO
Aleksandra Baránska – Policy Officer, Internal Energy Market, DG ENER
- The current market-design works well, so there was no need for a big reform. The main objective behind the reform proposal is to account for some shortcomings by focusing on 3 pillars:
- To improve how long-term markets work, there is too much focus on short-term markets
- To make the carbon-market design future proof and addressing the phase out fossil fuels, how to integrate more flexible energy generation, demand respond mechanisms and energy storage, and how to facilitate better uptake of renewables.
- Protecting consumers and enhancing their empowerment
Maria da Graça Carvalho – MEP (EPP, Portugal)
- The reform is now being negotiated by Members of the European Parliament. We hope to go plenaryby October, so we can finalise it in December.
- A point of concern is the fast implementation. There was not a lot of time for detailed studies and impact assessments, which comes with some risks. For example, the impacts on consumers were not assessed and are therefore uncertain.
Sonya Twohig – Secretary-General, ENTSO-E
- Preserving the integrity of the energy market design is very important.
- We are currently developing the appropriate regulation for networks and infrastructure, needed for the implementation of the reform. For example, a cyber security network code is just finished.
The value to the consumer must be highlight for everything we do as part of the electricity market reform.
Dr Bernd Weber – CEO, EPICO
- We should strengthen the European internal energy market, rather than undermining it. That means tackling and managing the costs of renewables for consumers, which include both households and industrial consumers.
- The proposal of the Commission shows a more evolutionary, rather than a revolutionary approach.
- We need a market-based way of financing our electricity market with CAPEX driven investment.
- Long-term contracts are the right way to go, that gives us two options:
- Double sided CfDs. They are not the preferred option and need further clarification.
- PPAs, which are the preferred option, because they are market-based, don’t entail subsidies and don’t require hedging.
You can find the recording of our panel discussion here.