Finalising the EU’s electricity market redesign for the benefit of small consumers

(EurActiv, 26 Oct 2023) A reform of the European electricity market is needed to give small consumers access to continuous, more affordable energy that is as carbon-free as possible. The introduction, for example, of a mechanism that removes from the mix carbon-free power plants that are too costly, will help reduce prices for customers, writes Thierry Bros.

Thierry Bros is an energy and climate expert. He is Professor at Sciences Po university in Paris and a regular contributor to Natural Gas World.

After the 17 October Council agreement and before final details are ironed out, it is worth thinking on how to implement the reform for the benefit of small consumers. As electricity market design partly failed due to too little innovation in the last 20 years, the mechanism needs also to be “innovation-fostering”.

Small consumers are not interested in spending time and effort in understanding the electricity system and their bills; they want a continuous secured supply of electricity as decarbonised as possible and as affordable as possible. Decarbonised electricity should therefore continue to have priority access to the grid but the rules should evolve to benefit customers and avoid rent-seeking situations.

Each intermittent renewable (wind, solar) and baseload decarbonised (run-of-river hydro, nuclear) plants could either decide to provide electricity on demand at market price or, more likely, apply to priority access to the grid with long-term contracts (Power Purchase Agreements, concluded between a large industrial consumer and a producer of decarbonised electricity, and fixed price) as agreed by the Council.

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EurActiv, 26 Oct 2023: Finalising the EU’s electricity market redesign for the benefit of small consumers