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EPEX SPOT: solution to the energy price crisis lies in renewables and flexibility

Electric power exchange EPEX SPOT is calling to protect the price formation process and the benefits of the EU Internal Energy Market.

During a meeting of the Exchange Council, members discussed the enduring energy price crisis and found that the solutions lie in the massive expansion of renewables and the use of more flexibility in the system. 

In particular, as highlighted in EPEX SPOT’s policy recommendations earlier in June, renewable energy support schemes, even market-based feed-in premiums, distort the market price and should be stepwise replaced by all possible market remunerations (power exchange, Guarantees of Origins, Power Purchase Agreements). EPEX SPOT recommended issuing GOs to both non-subsidised and subsidised renewables, to allow all renewable electricity generators to benefit from additional market-based revenue streams and support the use of PPAs and eliminate the need for subsidies for mature renewable technologies.

Regarding the flexibility aspect of the power system, there must be incentives for system operators to engage in flexible procurement processes, complementary to an appropriate grid expansion. EPEXT SPOT also warned about avoiding barriers for small-scale and demand-side flexibilities to participate in market processes.

However, on the basis of everything, there are meaningful price signals which set the right incentives for secure, clean and affordable electricity supply. The coupling of European electricity markets facilitates the integration of renewables and contributes greatly to the security of supply. Thus, the EPEX SPOT Exchange Council is encouraging all stakeholders for continued efforts, after the go-live of the Core Flow-Based Market Coupling Project on 8 June 2022, which introduced harmonised capacity calculation and allocation in 13 countries, with a total population of 278 million and estimated annual electricity use of 1,500 terawatt-hours (TWh).

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