EU seeks to revamp electricity market to boost renewables and cut prices

Last year's surging energy prices accelerated move towards protecting European consumers, say officials

Consumers have yet to benefit from the growing share of lower costs of renewables, said Europe’s energy commissioner Kadri Simson on Tuesday. EPA

EU executives on Tuesday unveiled a proposal to revamp the bloc’s electricity market to cushion the impact of the energy crisis caused by Russia’s invasion of Ukraine last year.

The European Commission’s Energy Commissioner Kadri Simson said the reform was aimed at making energy bills less vulnerable to short-term market price increases, accelerating the use of renewables and increasing customer protection.

“The dominance of the short-term market has amplified the effects of the gas price rise,” she said. “This has been felt by consumers who have been exposed to the wholesale prices that are too often dictated by the gas price from power plants. They have not been able to benefit from the growing share of lower costs of renewables.”

Wholesale energy prices in Europe are set according to the cost of the most expensive sources, usually gas-powered plants, those flexible enough to cover jumps in demand.

For European citizens, the reforms would introduce new rights to secure long-term, fixed-price contracts from their energy supplier, cutting their exposure to sharp rises.

They would also be allowed to have more than one meter and different contracts to more economically serve their needs, including charging their electric vehicle at night when the cost of power is lower.

They will also be allowed to share energy. “For example, if I put solar panels on my roof and I’m not at home during the day, I can share [the electricity generated] with my neighbours,” an EU official said.

The EU is looking to bolster the use of so-called power-purchase agreements that allow companies to benefit more easily from the more stable costs of non-fossil power.

Power producers would be offered security through the more widespread use of government contracts under which they would pay back revenue if the prices spike and receive compensation when they fall.

Brussels hopes the moves will bolster investment in non-fossil fuel energy as the EU seeks to meet its climate goals to reach net-zero and keep the electricity cost down.

“To stay on track and meet our green deal targets, the EU should triple its renewables deployment rate,” said Ms Simson.

The plans from the commission will now be assessed by the EU parliament and the member states before they can be turned into a series of laws, a process which is set to take several months at least.

“I do believe that parliament and council are willing to treat this as a priority, and that means that some parts of the proposal can help us already for the next year,” said Ms Simson.

She said it was “hopefully the last” piece of legislation to respond to the energy crisis.