Carbon-Free Europe Applauds Electricity Market Design Provisional Agreement
Brussels—Today, Carbon-Free Europe (CFE) released a statement from its Co-founder, Lindsey Walter, in support of the provisional agreement to reform the EU’s electricity market design (EMD) by the EU Institutions. Carbon-Free Europe supports an electricity market restructuring that accelerates the deployment of all clean power technologies while ensuring reliable and affordable electricity, as highlighted in our white paper on EMD reform.
“Carbon-Free Europe applauds the EU Institutions for reaching the electricity market design (EMD) provisional agreement,” said CFE Co-founder, Lindsey Walter. “Once passed, the reforms will stabilise electricity markets while incentivising investment across all clean energy technologies. While this agreement is a fitting intervention for the current energy crisis and near-term energy transition hurdles, we will face a whole new set of structural issues in another decade. We encourage the Commission to continue to update the EMD to meet the needs of an evolving market, not-yet-defined 2040 targets, and a more flexible and integrated energy system in the future.”
Background on the Electricity Market Design Reform On 15 January, the European Parliament’s Committee on Industry, Research and Energy (ITRE) approved the interinstitutional provisional agreement on the revision of the Electricity Market Design reached on 13 December 2023. In mid-March, the European Parliament’s plenary will vote on the agreement. The date of the final step in the process - which will be an official approval by EU Ministers - is still to be determined. However, the agreement was previously endorsed by EU ambassadors on 22 December 2023.
CFE’s Take on Key Components of EMD Reform
Contracts for Difference and Power Purchase Agreements CfDs and PPAs provide long-term price stability, protecting consumers from unanticipated and unmanageable price spikes based on fossil fuel prices. They also provide a stable investment environment for clean energy developers. By providing all clean energy technologies access to CfDs and renewable technologies access to CfDs or PPAs, the EMD reform is supporting investment in new power-generating facilities including wind energy, solar energy, geothermal energy, hydropower without reservoir, and nuclear energy.
Flexible connection The flexible connection agreement recognises the urgency to connect as many renewables as possible by ensuring renewable deployment is not stuck behind unnecessary transmission upgrades. It focuses on full deliverability of electricity while developing a network appropriate to the design of intermittent power sources.
Capacity remuneration mechanisms (CRMs) It’s clear the Commission recognises that this is a transition and not a hard turn. This provision acknowledges that the EU is in the midst of a complex energy transition. The CRMs provide a backstop for scenarios such as an energy crisis or longstanding extreme weather conditions, and ensure energy reliability and affordability throughout all conditions in all areas.