Habemus agreement. After four months of negotiations, the ministers of Energy of the twenty seven countries of the European Union have achieved a agreement on reform of the electricity market unanimously with the abstention of Hungary, according to Council sources. The objective of the reform, proposed in March by Brussels, is reduce price dependency of electricity from fossil fuels to avoid its volatility and accelerate the deployment of renewable energy. “We have reached an agreement that was unimaginable a couple of years ago. Consumers will be able to benefit from much more stable energy prices, less dependence on fossil fuels and better protection against future crises. We will also accelerate the deployment of energy renewables”, celebrated the third vice president and minister for the Ecological Transition, Teresa Ribera.
The agreement, which has managed to bridge the discrepancies between France and Germany, will now serve as mandate for negotiations between the Council and the European Parliament to finalize the final form of the legislation. Regarding Hungary’s abstention, Ribera stated that it was due to an issue related to “taxation and its impact on prices.” “There are issues that have not been fully developed in this text of the regulation, how we address the issue of storage and under what conditions. From the beginning we have said that there are aspects that we had to develop in the future“explained the vice president at a press conference.
He main castling during the last months it came from the axis Franco-German about contracts for differences, which are long-term contracts entered into by public entities to support investments, which supplement the market price when it is low and ask the producer to return an amount when the market price is above a certain limit, in order to avoid excessive profits for the generators. France and related countries They sought to apply the scheme to the existing facilities to obtain cheap prices for your nuclear energy. But Germany and other countries I wanted to limit the amount of energy subject to that mechanism. The German Government He also defended that the income generated by these instruments be directed not only to the consumersbut also benefit the companies in order to help their industry.
The pact finally approved establishes this figure as the only support formula for the investments in new facilities, while allowing their use in existing assets (such as nuclear), but under certain conditions that the European Commission will be in charge of monitoring under the criteria of “equal playing field between Member States”, as explained by the Commissioner for Energy, Kadri Simson, and Teresa Ribera at a press conference. “She is a victory for nuclear energy because the agreement guarantees the total technological neutrality with respect to all low-carbon energies, nuclear and renewables”, stated the French Minister of Energy Transition, Agnès Pannier-Runacher.
The agreement also includes the flexibility to redistribute income generated by this mechanism among end customers, but they could also be used to finance companies’ energy bills.
The proposal also eliminates the “temporary nature” of the capacity mechanisms –that reward technologies for being available– and simplifies procedures, as explained in a statement. The existing regime allows for the creation of this type of market, it is proposed as a last resort formula that is very difficult to use in practice. Furthermore, to satisfy Poland, highly dependent on coal, the final proposal adds an exception until 2028 on the limits on CO2 emissions of the security mechanism in case the supply has to be assured, as explained by Ribera.
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It includes strengthening consumer protection by establishing the possibility of accessing dynamic electricity prices, fixed-term and fixed-price contracts and adds the “temporary” possibility of applying regulated prices, even below their cost, for small and medium-sized companies in times of crisis. In addition, the declaration of a temporary electricity price crisis is defined when “very high” average wholesale prices last for at least six months and strong increases in retail prices are expected to continue for at least three months.
The objective now is to start the negotiations with the European Parliament starting next Thursday to shape the final text and comply with the plan of the Spanish presidency of the EU and the European Commission to achieve a reform before the end of the year.