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HomeEU affairsA people-centred electricity market design: MEPs back reform

A people-centred electricity market design: MEPs back reform

In their amendments to the draft legislation, members of the European Parliament proposed to further strengthen consumer protection against volatile prices by supporting the reform of the electricity market.

The aim is to ensure that all consumers, as well as small businesses, would benefit from long-term, affordable and stable prices and to mitigate the impact of sudden price shocks.

“With this agreement, Parliament puts citizens at the centre of the design of the electricity market, prohibiting companies from cutting the power of vulnerable and at-risk consumers, promoting the right to share energy, reducing price spikes and promoting affordable prices for citizens and companies”, said lead MEP Nicolás González Casares. “We turned CfDs into the reference system for encouraging the electricity sector to transition towards a renewable-based zero-emission system. A system that will improve make companies more competitive through clean electricity at competitive and stable prices.”

MEPs are also advocating that EU countries prohibit suppliers from cutting the electricity supply of vulnerable customers, including during disputes between suppliers and customers and prevent suppliers from requiring these customers to use prepayment systems.

In particular, the Energy Committee backed the wider use of so-called “Contracts for Difference” (CFDs) to encourage energy investments and suggested leaving the door open for equivalent support schemes after approval by the Commission.

MEPs also highlighted the importance of Power Purchase Agreements (PPAs) in providing consumers with stable prices and renewable energy providers with reliable revenues. The European Commission is tasked with setting up a marketplace for PPAs by the end of 2024.

Furthermore, MEPs adjusted the criteria for declaring an electricity price crisis, to make sure there are concrete measures to better protect citizens and companies.

Finally, the committee also advocated in favour of “non-fossil flexibility” (the ability of the power grid to adjust to changes in supply and demand without relying on fossil fuels) and flexibility on the demand side, for instance via the use of home battery systems. This can help balance the electricity grid, reduce price fluctuations and empower consumers to adapt their energy consumption to prices and their needs.

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