The consultation process gives the opportunity to provide feedback on a series of policy objectives to be pursued by the reform.
In particular, 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). According to the consultation document, the target is not to entirely change the current electricity market design. However, the reform shall include substantial adjustments to make the market more resilient and to in particular reduce the impact of gas prices.
In concrete terms, this means that e.g. 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. Liquidity in forward markets shall be increased by establishing virtual trading hubs for forward contracts, as they already exist in certain regions. 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. In addition, consideration will be given to adopting certain emergency interventions from the Council Regulation (EU) 2022/1854 of 6 October 2022 on an emergency intervention to address high energy prices.
The consultation is open to all stakeholders and other interested parties. The replies to the public consultation should be provided by 13 February 2023 at the latest.
The Hogan Lovells energy team may help you positioning your company in this relevant consultation.
Authored by Dr. Stefan Schröder and Fernando Calancha.