Brussels (energate) - The EU Commission has asked for comments on its plans to reform the electricity market design. It has received approval from the employers. In its response, the Business Europe association argues in favour of capacity mechanisms. In doing so, the association takes a similar position to that previously taken by the transmission system operators (
energate reported).
In its paper, the employers' organisation calls for an assessment of whether the European energy-only market is capable of stimulating the necessary investment in electricity generation and how capacity and flexibility should be remunerated in a future-proof, integrated European electricity market. Business Europe suggests that different types of technology-neutral capacity mechanisms should be considered to complement the development of renewable energy. In order to do this cost-effectively, there should be a public tender, according to Business Europe.
Preserving the benefits of cross-border trade
From the employers' point of view, the reform of the electricity market must not lead to cross-border trade being restricted or distorted. The association points to data from the EU regulatory agency Acer, which estimates the benefits of cross-border trade at 34 billion euros a year. "These gains should be further exploited, for example through massive investment in all necessary infrastructure, including networks, interconnectors and storage," Business Europe writes.
To limit the impact of high gas prices on consumer electricity prices, the association, like the EU Commission, advocates more hedging opportunities for consumers through long-term contracts. To promote long-term price signals and ensure that the price stability benefits of renewables are passed on to consumers, existing barriers to Power Purchase Agreements (PPAs) should be removed, Business Europe says.
For PPAs with industrial consumers, there should be instruments to cover counterparty risk, such as credit guarantees. There is also a need for marketplaces for PPAs, where generators and consumers can meet. Contracts for Difference (CfDs), which are already used in some Member States, should remain voluntary, according to the employers' organisation, because of the risks involved.
More flexibility options
Business Europe wants to see greater use of storage technologies and technologies for supply and demand flexibility. To strengthen the role of industrial prosumers, companies should be allowed to participate in energy communities. However, this would require a change to a definition in the 2018 Renewable Energy Directive. This would further support the development of renewable energy sources. /rl
