EU: New electricity market design to favor renewables

 
Europe’s renewable energy industry has called for a reform of the EU electricity market to be set as priority, outlining market adjustment features and principles that would help the EU reap the benefits of renewable energy power generation.

The share of electricity produced by renewables could grow from 28% today to 50% in 2030, contributing to the competitiveness of the European economy by supplying inexpensive power, it is stated in a position paper signed by EU renewable energy associations.

However, exploiting these benefits requires adjusting the market design to decentralised and variable power production, thus sending the appropriate signals to remove uneconomic, polluting and inflexible assets from the market.

“It is no longer a question of how to integrate renewables into an inflexible and centralised power market, it is time to think how the power market can maximise the potential of renewables. It is necessary for the power market to promote rather than hamper flexibility,” Jacopo Moccia, Policy Director at Ocean Energy Europe, said.

While recalling the equally important need for a better designed and more renewable energy systems (RES) based market for thermal energy, the EU renewable energy associations highlight the following key features as essential for a fully functioning electricity market supporting the energy transformation with renewables:

1. Ensuring RES participation to integrated markets in every timeframes
2. Strengthening the role of prosumers and promotion of self-consumption
3. Promoting and fully exploiting flexibility options for generation (including from dispatchable RES), consumption and storage
4. Providing investors with a stable and predictable regulatory framework, avoiding any retroactive measures
5. Carrying out an Emissions Trading System (ETS) reform which will provide a high and stable carbon price, thereby creating market exit signals for carbon-intensive and artificially inefficient power plants and creating long term investment signals for all abatement options
6. Making sure Capacity Remuneration Mechanisms (CRMs) are used as a last resort option and only after standardized regional system adequacy analysis
7. Focusing on regional and de-centralised energy production and consumption
8. Analysing the opportunities to further develop the integration of RES-based heat and power networks and solutions.

In the move to a new electricity market design providing a true level playing field for all participants, EU renewable energy associations regard the following policy instruments as a prerequisite to successfully master the energy transformation:

• Maintaining priority dispatch and balancing exemptions for renewables in regions with low penetration rate and until flexibility in the system remains hampered by inflexible power generation
• In line with internal energy market rules, more flexibility for Member States to choose the most appropriate economic instruments, adapted according to market and technology maturity, specific risk profiles and features
• Continued national dedicated frameworks for small and medium sized projects which should not be exposed to auctioning schemes
• Progressive introduction of more market-based support instruments such as Feed-in-premium for large-scale projects
• Support for research, innovation and demonstration of next generation renewable energy technologies.

The signatories of the position paper are: