Electricity market reform

Background

In March 2023, the European Commission adopted a legislative proposal for targeted reform of the electricity market, focusing on two different aspects: the remuneration of renewables and other technologies based on their true production cost, and ensuring the effective competition for gas supply and a well-functioning short-term market.

Key points

• Energy, including the infrastructure for the transport and distribution, cannot be treated like any other commodity: it is an essential building block of our economic and social system and thus a central part of the provision of public services. Therefore, energy supply is classified as a service of general interest. It is therefore necessary to create regulatory framework conditions for future energy that guarantee both an environmentally-friendly, affordable and reliable supply of energy and the right to energy. This also means that energy market design must take into account the requirements associated with decarbonisation. In order to ensure affordable basic energy supply, the EESC believes that the new market design must guarantee basic energy supply at regulated prices.

• In the context of a reform of the electricity market, liberalisation must be critically examined in terms of its sustainability, affordability and security of supply. In addition, it must not be forgotten since the current crisis shows that liberalised energy markets are unable to meet these needs and do not create enough incentives and investment security for renewable energy. Moreover, governments will be responsible for delivering these three objectives (sustainability, affordability and security of supply) over a long period, because the market will not combine and realise them spontaneously.

• Therefore, the EESC opts for a hybrid model, where market forces and target-driven management jointly lead to optimal market functioning within the framework of the stipulated objectives. The model, which is also already possible under the current regulations, should create a government-established "E-facility" which buys the electricity from the producers and sells it to the suppliers of household customers, SMEs, Citizen Energy Communities and large consumers, and where appropriate and possible to other countries, using the three objectives as a framework for decision making. This facility would conclude long-term contracts with electricity producers on the basis of tenders. These contracts would be of various types, such as power purchase agreements (PPA), contracts for difference (CfD) and cost+ contracts.

Additional information

Section: Transport, Energy, Infrastructure and the Information Society (TEN)

Opinion number: TEN/793

Opinion type: Mandatory

Referral: COM(2023) 148 final 2023/0077 COD

Rapporteur: Jan Dirx (Civil Society Organisations - Group III / Netherlands)

Co-rapporteur: Christophe Quarez (Workers - Group II / France)

Date of adoption by section: 16 May 2023

Result of the vote: 57 in favour, 0 against, 2 abstentions

Date of adoption in plenary: 14-15 June 2023

Result of the vote: 209 in favour, 11 against, 9 abstentions

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