The European Commission has proposed to reform the EU’s electricity market design to accelerate a surge in renewables and the phase-out of gas.
The proposals are expected to make consumer bills less dependent on volatile fossil fuel prices, better protect consumers from future price spikes, potential market manipulation and make the EU industry cleaner and more competitive.
The energy crisis, spurred by Russia’s invasion of Ukraine, has underlined the need to quickly adapt the electricity market to better support the green transition and offer energy consumers, both households and businesses, widespread access to affordable renewable and non-fossil electricity.
The proposed reform foresees revisions to several pieces of EU legislation – notably the Electricity Regulation, the Electricity Directive, and the REMIT Regulation.
It introduces measures that incentivise longer term contracts with non-fossil power production and bring more clean flexible solutions into the system to compete with gas, such as demand response and storage.
This will decrease the impact of fossil fuels on the consumer electricity bills, as well as ensure that the lower cost of renewables is reflected in these.
In addition, the proposed reform will boost open and fair competition in the European wholesale energy markets by enhancing market transparency and integrity.
Building a renewables-based energy system will not only be crucial to lower consumer bills, but also to ensure a sustainable and independent energy supply to the EU, in line with the European Green Deal and the REPowerEU Plan.
This reform, which is part of the Green Deal Industrial Plan, will also allow the European industry to have access to a renewable, non-fossil and affordable power supply which is a key enabler of decarbonisation and the green transition.
To reach our energy and climate targets, the deployment of renewables will need to triple by the end of this decade.
Ignacio Galán, Iberdrola’s executive chairman, said: “The EU energy market has achieved a great deal over the last two decades to drive the energy transition forward.
“The proposed reforms recognise that increasing electrification through investments in renewables, networks and storage is the only way to achieve energy security in Europe.
“Offering customers stability through long-term clean energy contracts has been core to our strategy for years, so we welcome measures that seek to strengthen these aspects based on market mechanisms.
“The Commission has acted swiftly to respond to the crisis and keep the Single Market and the Green Deal goals on track.
“Members states and the European Parliament now need to be unified and move with the same speed to ensure a clean and secure energy future for the continent becomes a reality.”