- The EU Commission proposal is a needed step for a 100% renewable energy-based system but needs to avoid non-renewable technologies stealing the role
Brussels, 14 March 2023 – CAN Europe welcomes today’s legislative proposal by the European Commission to reform the EU electricity market design, a good step in the right direction for the energy system of tomorrow that should be 100% renewable energy based and put people at the heart. The proposed legislative framework adds the missing pieces in the puzzle to be able to make the shift, by strengthening the role of demand-side flexibility to replace the price setting role of fossil fuels. It thus sets out to complement the 100% renewables-based energy system with demand side measures, to decrease the peak demand for electricity and to enable people to be active participants of the electricity market.
The proposal comes after a series of emergency intervention measures in the electricity and fossil gas markets proposed by the Commission since the ‘REPowerEU’ plan – a response to the fossil fuel crisis after Russia’s invasion of Ukraine. It is meant to be a targeted reform of the electricity market design which kicked off in early 2023 with a very short public consultation, and without an impact assessment of the implementation of the existing market design that was adopted in 2019 as part of the Clean Energy Package.
It also introduces a new article to lay the groundwork for people to have the right to energy sharing, and unleash the potential of collective self-consumers.
Some important points that CAN Europe had suggested as part of the response to the Commission’s public consultation (see Energy For Tomorrow briefing) are reflected in the proposal:
- To provide a level playing field and give flexible self-consumers, storage, energy efficiency and other demand-side measures, independent renewable energy producers and energy communities access to all markets, for example by reducing the bidding size to 100kW;
- To enable energy sharing behind the substation: clarify the definition of energy sharing as an activity, make sure energy sharing is rewarded for the contributions it makes to the system in terms of real value, and give distribution system operators (DSOs) a “duty to cooperate” to facilitate energy sharing;
- To require national demand-side flexibility targets, informed by an impact assessment of the implementation of the demand-side flexibility provisions under the Clean Energy Package, as part of National Energy and Climate Plans.
CAN Europe also welcomes the proposal for Member States to design or redesign capacity mechanisms and to introduce new support schemes in order to promote demand-side flexibility. However, without lowering the required CO2 threshold for capacity mechanisms, it is questionable whether demand-side flexibility would be on a level-playing field with centralised, non-renewable technologies such as fossil gas. CAN Europe recommends lowering the required CO2 threshold to 0g of CO2 per kW per hour (during operation) of electricity for new assets, and introduce a gradual decrease of the yearly CO2 threshold, in line with the 2030, 2040 and mid-decade emission reduction targets.
“The proposal is the needed step to build the 100% renewable energy system of tomorrow. It is a positive development to properly value demand-side measures as a resource on equal footing with supply-side in order to replace the ‘marginal’ but very costly role of fossil gas while ensuring consumers are at the driving seat of both the energy transition and their energy bills. As the text evolves, we need to see the “non-fossil flexibility” language change into “demand-side flexibility” to make this intention explicit and avoid other expensive centralised non-renewable energy technologies, such as nuclear, stealing the potential role of empowered consumers”, said Elif Gündüzyeli, Senior Energy Expert at CAN Europe.
- Nina Tramullas, Interim Head of Communications: email@example.com