(Bloomberg) — The European Union must reach a political deal to reform its electricity market by the summer to ensure it’s ready to withstand further energy turmoil next winter, according to Pascal Canfin, chair of the parliament’s environment committee.
(Bloomberg) — The European Union must reach a political deal to reform its electricity market by the summer to ensure it’s ready to withstand further energy turmoil next winter, according to Pascal Canfin, chair of the parliament’s environment committee.
The commission, the EU’s executive branch, is due to table a proposal in March for overhauling the bloc’s electricity market. It wants to weaken the price-setting status of natural gas — which soared over the past year – while better reflecting the growing share of renewables in power generation.
The EU’s electricity market currently uses a marginal pricing model, where the most expensive form of energy needed to satisfy demand sets the price. While proponents say that’s ensured supply and provided investment incentives for renewables, critics argue that spiraling gas prices have distorted the market, hurting consumers and generating windfall profits for power companies.
“We are in a situation, rather stupid, where our electricity price sold on the market, produced at home and decarbonized, is fixed by an energy which is fossil-based and imported,” Canfin told reporters in a briefing. “It means that we let our price set by the US, Putin, Qatar, Algeria. I don’t think it is reasonable.”
Canfin wants to accelerate a reform process that can often take over a year, which may raise concerns the bloc will rush through an overhaul of its three-decade-old electricity market.
This month, Spain proposed using so-called contracts for differences to encourage long-term investments in renewables. The commission is due to launch a public consultation as soon as this week.
Canfin said the commission could pass the reform as an emergency measure — as it did with the gas price cap and permitting for renewables last year — or parliament could fast track the process to try and reach an agreement in less than two months.
“We need to make sure that this reform has concrete effect short term,” Canfin said. “It means going fast — six months maximum.”
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