Demand Imbalance Arbitrage

The Only Trading Method You Need

Forecast Future Price Action

EU Commission to Introduce Electricity Market Reform to Protect Consumers

/
/
/
122 Views

The European Union is looking to reform its electricity market in an effort to protect consumer energy bills from short-term swings in fossil fuel prices. The European Commission launched a public consultation as part of the reform on the 23rd of January, aiming to get changes in place quickly enough to see their effects in the next heating season.[0] The consultation runs until the 13th of February and the EU Commission intends to propose a reform by the end of March.

The reform aims to adjust the EU’s electricity market design through amendments to the Electricity Regulation (EU) 2019/943, the Electricity Directive (EU) 2019/944 and the Regulation (EU) No 1227/2011 (REMIT). The target is to not entirely change the current electricity market design, but to make substantial adjustments to make the market more resilient and to in particular reduce the impact of gas prices.[1] The objective of the reform is to ensure price stability for consumers, enhance the robustness of the European Union’s electricity market, and further support the objective of ‘decarbonizing’ the energy sector.[2]

Incentives for long-term contracts shall be created through long-term power purchase agreements (PPAs) and/or so-called two-way contracts for difference (“two-way CfDs”), so that electricity costs become more independent from the short-term cost of fossil fuels.[0] Creating virtual trading hubs for forward contracts, similar to what has been done in certain areas, can help to increase liquidity in the forward markets.[1] Additionally, the conditions for flexibility solutions such as demand response, energy storage, and other weather independent renewable and low carbon sources shall be improved through measures that incentivize the development of such flexibility instruments in the market.[1] It is hoped that such measures will result in more stability and price predictability, benefitting both consumers and power companies, while also addressing the issue of windfall profits.

The EU electricity market reform is a crucial step towards the goal of protecting consumers from rising energy costs. The European Commission is hoping to have the reform in place by spring, and is currently in discussion with member states to ensure the new measures and policies are effective.

0. “Electricity Market Design: how can reforms accelerate the transition and help cut energy prices?” Energy Post, 13 Feb. 2023, https://energypost.eu/electricity-market-design-how-can-reforms-accelerate-the-transition-and-help-cut-energy-prices/

1. “European Union public consultation – Reform of the EU’s electricity market design” JD Supra, 8 Feb. 2023, https://www.jdsupra.com/legalnews/european-union-public-consultation-7203773/

2. “EU Hopes To Reform Electricity Market by April” The European Conservative, 4 Feb. 2023, https://europeanconservative.com/articles/news/eu-hopes-to-reform-electricity-market-by-april

Forecast Future Price Action
This div height required for enabling the sticky sidebar
Ad Clicks : Ad Views : Ad Clicks : Ad Views : Ad Clicks : Ad Views : Ad Clicks : Ad Views : Ad Clicks : Ad Views : Ad Clicks : Ad Views :