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The European Union and the European Parliament reached on Thursday a provisional deal to reform the EU’s electricity market design to make power prices less dependent on volatile fossil fuel prices.
The EU is seeking to reform the way its electricity market works to avoid a repeat of last year’s energy crisis which hit households and industries with soaring power prices.
The reform is also aimed at shielding consumers from price spikes, accelerating the deployment of renewable energies, and improving consumer protection.
The deal now needs to be endorsed and formally adopted by both the EU Council and the European Parliament to come into effect.
The agreement would pave the way for EU member states to support nuclear power-generating facilities via two-way contracts for difference (CfDs).
The deal would also allow coal-fired plants to receive subsidies to provide backup electricity during energy crises.
“This deal is great news, as it will help us reduce even more the EU’s dependence on Russian gas and boost fossil-free energy to cut greenhouse gas emissions,” said Teresa Ribera, Spain’s Minister for the Ecological Transition, whose country holds the rotating EU presidency.
“Thanks to this agreement, we will be able to stabilise long-term markets, speed up the deployment of renewable and fossil-free energy sources, offer more affordable electricity to the EU’s citizens and enhance industrial competitiveness,” Ribera added.
The European Commission in March presented a proposal to revise the rules for electricity market design and for improving the EU protection against market manipulation in the wholesale energy market.
The Commission says that the market reform is aimed at making the EU energy market more resilient and making the energy bills of European consumers and companies more independent from the short-term market price of electricity. The EU’s new electricity market design would accelerate a surge in renewables and the phase-out of gas, make consumer bills less dependent on volatile fossil fuel prices, better protect consumers from future price spikes and potential market manipulation, and make the EU’s industry clean and more competitive, the Commission says.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com