On January 23rd, European Commission launched public consultations on reforming the structure of the EU electricity market. The consultation will help the Commission to prepare a legislative proposal (in the form of a draft regulation) scheduled for the first quarter of this year. The consultation will last until February 13th.

The consultation covers four main areas:

• Reducing the dependence of electricity bills on short-term fossil fuel prices in favor of long-term contracts and supporting the development of renewable energy sources

• Improve the functioning of the market to ensure security of supply and make full use of alternatives to gas, such as storage and demand response

• Increasing the protection of the consumer’s position

• Improve market transparency, integrity and oversight

In particular, the planned outcome of the consultations is to receive information on the following issues related to the structure of the market:

a) Methods of supporting PPA on RES:

• Credit guarantees provided by public entities,

• Public tenders for RES, in which contracting of some projects under the PPA is guaranteed

• consider introducing measures to ensure that industrial customers use the full potential of electricity purchase contracts to reduce their exposure to short-term markets and that energy suppliers enter the electricity purchase contract market more actively.

• supporting contract harmonization to aggregate more demand and enable cross-border contracts.

b) Bilateral Contracts for Difference (“two-way-CfDs”), different levels of maturity of this solution are considered:

• As an additional instrument, its use for Member States’ decisions,

• Obligatory for investments under public support

•  + the possibility of using “two-way”-CfDs” for selected already operating projects

• As above, but with the mandatory impression of “two-watt-CfDs” to already existing projects (ex-post price regulation), risk of counterproductive effect, with wrong estimation of prices

c) Futures markets:

• Creation of virtual trading hubs for futures that already exist in some regions.

d) Facilitations for RES

• Guarantee of access to transmission capacity for offshore winds

• removal of barriers hindering the popularization of PPAs with renewable sources or the popularization of bilateral CFD contracts,

• empowering and protecting consumers and increasing supply flexibility and storage capacity.

e) Reducing the revenues of infra-marginal producers, i.e. lower-cost technologies such as renewable energy sources, nuclear energy and coal, which supply electricity to the grid at lower costs than the prices set by more expensive “marginal” (marginal) producers.

More information HERE