EU faced with disagreement of countries in energy market
2023.02.13 03:19
EU faced with disagreement of countries in energy market
By Tiffany Smith
Budrigannews.com – In response to the energy crisis, Denmark, Germany, the Netherlands, Estonia, Finland, Luxembourg, and Latvia have urged Brussels not to rush into major changes to the European Union’s electricity market. Instead, they have called for limited alterations to the system. Luxembourg is the only country in the group.
The European Commission is working on a new set of rules for the EU electricity market. The goal is to protect consumers’ bills from spikes in the price of fossil fuels and avoid a repeat of the surge in electricity prices caused by cuts to Russian gas supply last year.
In a letter, the seven nations, led by Denmark, stated that the current market structure in Europe has contributed to years of lower electricity prices, helped expand renewable energy, and ensured that sufficient power was produced to satisfy demand and prevent shortages.
Denmark’s energy minister, Lars Aagaard, stated, “We must resist the temptation to kill the golden goose, that our single market for electricity has been in the last decade.”
The nations stated that there was room for improvement, particularly in light of the rising cost of electricity this past year. They stated, however, that any modifications must guarantee the market’s continued operation and massive investment in renewable energy.
The letter to the Commission, which was seen by Reuters, stated that “any reform going beyond targeted adjustments to the existing framework should be supported by an in-depth impact assessment and should not be adopted in crisis mode.”
Spain and France, among others, are pursuing more extensive reform. In an effort to reduce price spikes, Spain has proposed moving toward power plant contracts with longer terms and fixed prices.
In their letter, the seven nations stated that this could be accomplished through schemes like contracts for difference (CfDs), but that they should be voluntary, focus on new renewable generation, and still “react” to the market.
Eurelectric, a lobbying group for the electricity industry, has also warned against making CfDs mandatory because, according to them, doing so could hinder investor interest and reduce competition in the power market.
In their letter, the seven nations endorsed the Commission’s proposal to make it simpler for consumers to choose between fixed-price and fluctuating-price power contracts.
However, they rejected a second proposal from the Commission to extend a temporary EU measure that reclaims windfall revenue from generators that do not use gas.
The nations stated in the letter that “that could compromise investors’ confidence in the needed investments.” The EU estimates that annual investments in renewable energy worth hundreds of billions of euros are required to assist nations in quitting Russian fossil fuels.
