The European Parliament and the Council of the EU reached a provisional agreement to reform the EU’s electricity market design (EMD). The reform aims to make electricity prices less dependent on volatile fossil fuel prices, shield consumers from price spikes, accelerate the deployment of renewable energies and improve consumer protection.
The Council and the Parliament agreed to give member states the possibility to exclusively support the purchase of new renewable generation, where conditions allow and in line with member states’ decarbonisation plans. Both co-legislators also agreed to give the Council the power to declare a crisis, on the basis of a Commission proposal, related to the average wholesale electricity price or a sharp increase in electricity retail prices.
In addition, the Council and the Parliament agreed to reinforce the measures to be put in place by member states to protect vulnerable and energy poor customers, including the addition of the definition of energy poverty accompanied by a reference to the new energy efficiency directive taking appropriate measures. They also agreed to make capacity mechanisms a more structural element of the electricity market.
Finally, both co-legislators agreed to use a two-way contract for difference model, which would apply to investments in new power-generating facilities based on wind energy, solar energy, geothermal energy, hydropower without reservoir and nuclear energy.
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