EU proposes reforms of electricity market

The reforms aim to make consumer bills less dependent on volatile fossil fuel prices

The European Commission has proposed to reform the EU’s electricity market design to accelerate the surge in renewables and phase out of gas.

The move is aimed at promoting the transition to renewables, reducing dependency on volatile fossil fuel prices and protecting consumers from market manipulation and price spikes.

The proposed changes will revise several pieces of EU legislation, including the Electricity Regulation, the Electricity Directive and the REMIT Regulation and will incentivise longer-term contracts with non-fossil power production, as well as bring more clean flexible solutions into the system to compete with gas.

Member states will be required to assess their needs and establish objectives to increase non-fossil flexibility and will have the possibility to introduce new support schemes, especially for demand response and storage.

The Commission is proposing to facilitate the deployment of more stable long-term contracts such as power purchase agreements to enhance the competitiveness of the EU industry and reduce its exposure to volatile prices.

Officials say the reform will also provide power producers with revenue stability and shield the industry from price volatility by channelling excess revenues to consumers and boosting the liquidity of the markets for long-term contracts.

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