EU electricity market redesign: a protean moment

EU electricity market redesign: a protean moment

On July 15, the European Commission will take a concrete step towards fleshing out its vision for an Energy Union for Europe. It will for the first time unveil its thinking on how the European electricity market should look in future and according to what rules it should function. We expect two strategy papers, one dedicated to the wholesale market, the other to the retail market.

Drafts of both papers have been leaked in the past few weeks (see the wholesale and retail drafts on EU twitterer Alice Stollmeyers blog). A look at these documents provides a good insight into what the EU intends to do next. Note that they are the start, not the end of Europes electricity market redesign, however. The wholesale paper is indeed a consultation that comes with a long list of questions to stakeholders. Legislative proposals are due next year.

The goal of the redesign is that of the Energy Union: to see through a successful transition to a more secure, affordable, sustainable energy system. In the 1990s, it was all about market integration. Now the policy priorities are decarbonisation and security of supply. Market design needs to evolve to give incentives for those priorities, explains Fabien Roques, co-author of a new study from FTI-CL Energy (see box) called Toward the Target Model 2.0: Policy recommendations for a sustainable EU power market design. This was launched in Brussels on 29 June.

Historically, power market development has focused on day-ahead energy market coupling, continues Roques. It was the right focus ten years ago. But now, it should be about markets closer to real-time such as the intra-day market, long-term investment signals, and services beyond energy supply such as balancing. The EUs 2009 renewable energy directive led to a surge in renewables that has left conventional generators, grid operators, and indeed regulators and policymakers scrambling to catch up.

Todays electricity market faces two new kinds of integration challenge: 1) renewables and 2) consumers. In its draft papers, the Commission gives an idea of how it believes these should be tackled then asks stakeholders what they think.

Source: Energy Post

SMART GRID Bulletin April 2017

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