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The new EU electricity market design reform

Written by
Tomás Oliveira

Around one year ago, news emerged regarding the EU's plans for reforming the electricity market. With the goal to protect consumers and companies from short-term market price swings and boost investments in renewable energy, this proposed reform came into discussion as a result of the experienced price volatility since the summer of 2021. 

2 min
21st Mar, 2024
Market Trends
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In December 2023, the European Parliament finalised an agreement on the reform of the EU's electricity market design. We'll review the key points of this agreement and their direct implications for the PPA market.

 

Encouraging PPAs

Member States are required to promote PPAs by eliminating barriers and discriminatory procedures. This promotion seeks to offer price stability and align with national energy and climate plans, particularly emphasising decarbonisation and renewable energy goals, while ensuring competitive and liquid electricity markets and cross-border trade.

 

Assessing PPA market platforms

The Commission will evaluate the feasibility of establishing one or more EU market platforms for PPAs. These platforms, operating voluntarily, may aggregate PPA demand through various methods while ensuring compatibility with existing electricity market platforms, potentially at a cross-border scale.

 

Demand aggregation

Member States can facilitate the aggregation of PPA demand from customers facing entry barriers. By pooling demand, these customers can present appealing PPA opportunities to producers, potentially boosting market involvement.

 

Selling electricity through PPAs despite support schemes

Support schemes for renewable electricity should permit projects to reserve a portion of their electricity for PPA or other market-based sales. This provision ensures market competition, especially when both PPA parties belong to the same entity.

 

Standard PPA contracts

ACER, in collaboration with stakeholders, will explore the necessity for standard PPA contracts. These contracts, voluntary for parties involved, may encompass various durations, price formulas, and considerations for load and generation profiles.

 

Regulatory considerations

When Member States enact measures directly affecting PPAs, they must consider existing and future agreements and respect legitimate expectations. Therefore, the Commission will conduct biennial assessments, starting January 2026, to identify persisting PPA market barriers and ensure transparency.

 

Formal adoption and implications

The political compromise reached requires formal adoption by the European Parliament and Council, possibly by June 2024. This development underscores the EU's commitment to addressing electricity price fluctuations, safeguarding consumers, enhancing market efficiency, and marks a significant step in promoting efficiency within the PPA market.
 

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PPA Origination, Structuring and Pricing