“Not a big hit” – The reform of the EU electricity market is a disappointment

“It’s not the big change,” is also the first assessment of energy market expert Karina Knaus of the energy agency. However, it is still much too early for a definitive assessment, Knaus said on Wednesday. “There are a few points that are not yet fully defined.” The expert explains: “Of course there are individual approaches that also differ from what we had so far, but it’s not really a complete system switch.” According to Knaus, that would not be possible within a year – by then the reform must have been implemented.

The Merit Order principle remains in effect
What is particularly disappointing in many cases: The so-called merit order principle, in which the electricity price is always determined by the system that is required to cover the electricity requirement, continues to apply. As a result, the expensive electricity produced from gas-fired power stations drives up the entire electricity price. Although the aim was to reduce the dependence of electricity prices on short-term price developments, the short-term price signals are, according to EU circles, crucial for the creation of the European internal electricity market. Therefore, the previous principle is not abandoned, but supplemented with additional mechanisms that enable longer-term price planning for both consumers and companies.

However, the proposal provides for short-term price developments to be absorbed by longer-term contracts. Two types of contracts can be used for this, depending on whether the state is involved in the investment decision. On the one hand, there are contracts between two private individuals, such as an electricity producer and a company, for which incentives can be set. On the other hand, it concerns “differentiated contracts” that allow EU countries to ensure new investments in the electricity market. These treaties are already in use in some countries.

Revenue caps set by tendering process
The European Commission’s proposal stipulates that countries investing in certain technologies must use this type of contract. A wind farm subsidized with public funds would then have a guaranteed minimum income, but would no longer be able to generate the market price, but the yield determined on the market in the event of a sharp rise in the price of electricity on the market. time of the investment. The revenue cap would be determined through bidding processes.

Consumers must be able to take out more than one tariff
Nuclear energy is also on the list of technologies for which contracts for difference are being considered, and not just renewable energy sources, because nuclear power plants also run permanently due to their low variable costs. The reform should entitle consumers to fixed electricity prices for a certain period of time. In addition, electricity consumers should be able to take out more than one tariff, for example a tariff for the general electricity consumption of a household, combined with more variable electricity tariffs for heat pumps or charging electric cars. A new right for electricity consumers to share renewable energy, for example with neighbours, is also planned.

EU countries should also be allowed to regulate electricity prices for households and small and medium-sized enterprises for a limited period of time in crisis situations.