Europe’s electricity market is “not fit for purpose on renewables” and must be changed to reward clean power.
The European Wind Energy Association (EWEA) has called on the continent’s political leaders to begin debating the issue on foot of today’s International Energy Agency report on market design.
“The renewable technologies required to reduce Europe’s emissions and guarantee its energy security are ready to install. But as it stands, the current market design is not fit for purpose on renewables,” EWEA said.
“It is failing to provide long-term signals for investment, primarily due to low wholesale electricity prices.
“This is exacerbated by a glut of capacity, overinvestment in conventional power plants in years past, and an exclusive focus on the supply side with little consideration for alternatives such as demand response.”
EWEA said the market must be adjusted to attract clean and flexible power production and encourage pan-European trading to increase the integration of renewables.
“Power producers must be able to trade electricity as close to the time of production as possible. Harmonising the trading deadline across Europe’s borders will allow for real-time exchange,” it said.
“Additionally, coupling electricity markets and broadening the balancing area over national frontiers will ensure the European energy market gets the most out of renewable energy production.”
EWEA added: “If policymakers get it right on market design, the share of electricity produced by renewables could grow from 25% today to 50% in 2030 contributing to the competitiveness of the European economy by supplying inexpensive power thanks to low marginal production costs.”
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