The EU Commission’s proposal for improving the electricity market design: treading water, but not drowning

C. Batlle, T. Schittekatte, P. Mastropietro, P. Rodilla

Current Sustainable/Renewable Energy Reports Pp. 197 - 205

Summary:

Purpose of Review

On March 14, 2023, the European Commission (EC) published the much awaited “Proposal for a regulation (…) to improve the Union’s electricity market design.” The proposed regulation reflects the verdict of the EC after several months of fervent debate triggered by the energy crisis that has affected the European region. In this paper, we discuss several crucial elements that are part of the proposed regulation.

Recent Findings

In a nutshell, we deem the EC has done a great job managing a highly complicated situation. The proposal preserves the crucial role of short-term electricity markets and puts the focus on the key flaw: the perennial incompleteness of long-term power markets. The EC has put forward a large battery of measures, covering different dimensions and with very different potential impacts on the market design.

Summary

Here we focus on what we consider to be the four key elements of the proposal: (i) the promotion of long-term contracting, (ii) interventions during electricity price crises, (iii) the strategy for an efficient supplier risk management, and (iv) flexibility support schemes and capacity remuneration mechanisms.

Spanish layman's summary:

En marzo de 2023, la Comisión Europea ha presentado su propuesta para mejorar el diseño del mercado eléctrico. Esta propuesta preserva el rol central del mercado de corto plazo. En este artículo, nos centramos en algunos elementos que, en nuestra opinión, requieren de un análisis más detallado.

English layman's summary:

On March 2023, the European Commission presented its proposal to improve the electricity market design. We highly welcome the proposal, which preserves the key role of short-term markets. This research brief discusses some elements of the proposal that, in our view, require further analysis.

Keywords: Electricity market design; European Union; Energy crisis; Renewables; Flexibility

DOI reference: https://doi.org/10.1007/s40518-023-00223-4

Published on-line: August 2023.

Citation:
C. Batlle, T. Schittekatte, P. Mastropietro, P. Rodilla, The EU Commission’s proposal for improving the electricity market design: treading water, but not drowning. Current Sustainable/Renewable Energy Reports. Pp. 197 - 205 [Online: August 2023]