RGI Statement on the EU Electricity Market Design reform

A future-proof electricity market design requires a strong vision focusing on electrification and decarbonisation by 2040. With this statement, Renewables Grid Initiative (RGI) and its Members want to concentrate on a few aspects of the European Commission’s legislative proposal on the reform of the EU electricity market design and make proposals as well as raise questions which will guide policymakers through the ongoing and upcoming legislative processes.

The Renewables Grid Initiative and its Members welcome the efforts of the European Commission to improve the electricity market design. It is true that over the past decade, the EU electricity market design has enabled the integration of increasing volumes of renewable energy sources (RES), ensuring optimal dispatch of energy production capacities across the European Union. Central to this success has been the deployment and use of interconnectors, which enabled the integration of the EU internal electricity market and the cross-border electricity trade between Member States.

However, the ongoing gas and energy crisis has had a knock-on effect on electricity prices. Coupled with the increasing shares of renewables in the energy system, this poses the question of how the current market design needs to evolve to support timely decarbonisation, reward electrification, and function within – and for – an energy system largely based on variable RES. We acknowledge that a proper implementation of the provisions envisaged in the ‘Clean Energy for all Europeans’ package will bring benefits. But we also need to ask: How can the electricity market design be improved to better protect and empower EU consumers from excessive volatility in times of crisis while ensuring system security?

In this statement, RGI wants to stress that the discussions about the electricity market reform have to distinguish between two temporal dimensions, the short-term and the medium-, and long-term adjustments. While this distinction makes sense under the current conditions, it should be clear that the short-term adjustments should also be fit for the future and a long-term market design. At the same time we need to start discussing long-term adjustments now, as they may require time to be understood and defined in detail:

(1) Short-term, targeted adjustments are needed to deal with the ongoing energy crisis, and the need to protect consumers from volatile and increasing prices in current and future times of scarcity. Whether the timeline of the current reform and legislative process will allow an effective and timely response to the ongoing energy crisis is questionable. In any case, any short-term design adjustments should be assessed in view of the need to enable and promote a much faster RES deployment and an optimisation at the system level now and in the future.

(2) The medium to long-term market adjustments should further support and promote an energy system largely based on variable RES, sufficiently incentivise investments in renewable power generation and flexibility, and remove existing barriers, whenever present. The discussion about medium to long-term market adjustments should consider measures and or approaches that may not yet be necessary for the current share of renewables.

The full statement can be downloaded below.

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RGI gratefully acknowledges the EU LIFE funding support:

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Funded by the European Union. Views and opinions expressed are however those of the author(s) only and do not necessarily reflect those of the European Union or the LIFE Programme. Neither the European Union nor the granting authority can be held responsible for them.