The European Council and the European Parliament have reached a provisional agreement on reforming the design of the European Union's electricity market, which will end nine months of negotiations on the future of Europe's energy mix.
The European Council, a body made up of representatives of EU member states, proposed reforms in March this year aimed at increasing the uptake of renewable electricity on the continent.
Teresa Ribera, Third Vice President of the Spanish Government and Minister of Ecological Transition and Demographic Challenges, said: "This agreement is good news. It will help us further reduce the EU's dependence on Russian natural gas, promote the development of fossil-free energy and reduce greenhouse gas emissions. ."
The Council aims to amend a number of pieces of legislation, including the Electricity Regulation, the Electricity Directive and the Integrity and Transparency in Wholesale Energy Markets Regulation, and to work closely with the European Parliament (the EU's legislative body, whose members are elected by the EU electorate). directly elected) for nearly a year.
Morten Helveg, a Danish MEP and member of Renew Europe, said: "We have also sought to ensure that member states have the flexibility to design roadmaps that support the deployment of clean energy. Both the Council and Parliament want the negotiations to end and are eager to start implementing the agreed changes."
"With the efforts of all parties, this agreement will truly promote energy security, stabilize prices, and achieve decarbonization."
Stabilize prices and ensure feasibility
In the interim agreement, national governments have the right to provide direct financial support for power purchase agreements (PPAs) signed within their borders, thereby increasing the possibility of renewable energy generation facilities selling electricity directly to governments. By making governments potential customers of renewable electricity, new clean power generation facilities will be more financially viable.
"Companies will benefit from and be encouraged to sign PPAs backed by state guarantees," said Naomi Chevillard, head of regulatory affairs at SolarPower Europe. SolarPower Europe has been pushing the EU to adopt many of the reforms proposed by the Council.
Chevillard added: "For the first time, citizens have a sacred right to energy sharing. Europeans now have the right to sell excess solar energy to their neighbors or buy it within their communities at a lower price."
Through energy sharing, we can support the grid while providing solar power to homes that do not yet have solar modules installed. "
The institutions also agreed to the terms set by the Council on CFDs. Currently, governments are required to use contracts for difference with fixed price caps and floors when investing in new power generation facilities. Renewable energy generation is more prone to electricity price fluctuations than fossil fuel generation, and the purpose of fixing prices is to minimize such price fluctuations. The Council hopes that this measure will also make new renewable power projects more attractive investments for financial institutions.
The Council and Parliament have also given the former and the European Commission the power to declare an energy price "crisis", which will allow the Council and Parliament to reduce electricity prices for what they call Europe's "vulnerable and disadvantaged customers". Electricity prices have risen sharply since the Russia-Ukraine conflict. This measure aims to ensure that high electricity prices do not affect citizens' quality of life as winter approaches.
About solar energy
This year, the European solar industry has encountered a series of challenges. In April, LevelTen Energy reported that the value of solar PPAs signed in Europe had fallen since the end of 2022, suggesting that new solar power projects were no longer profitable for developers.
Likewise, in September, SolarPower Europe called on lawmakers to end what it called a "precarious situation", especially for European solar manufacturers. Many manufacturers are finding their profit margins eroded by the influx of cheap components into the continent.
Much of the criticism of SolarPower Europe focuses on the fact that European governments and companies are keen to install solar modules and invest in new solar projects, but are not sourcing European-made modules for these projects. This has created a European solar The supply chain is highly unbalanced and ultimately becomes economically unsustainable.
In fact, 2023 will be a record year for European solar capacity. SolarPower Europe reports that European developers will install 56GW of new capacity this year, a record high. Given the clear demand for new solar projects across the continent, SolarPower Europe is optimistic that the new agreement will encourage the development of a complete, financially sustainable European supply chain.
Coal exemption raises questions
However, some of the interim deals bode ill for Europe's renewable energy industry, particularly one that would allow Poland to use coal-fired peaking plants to meet its electricity needs in the event of another energy crisis in Europe. While this would provide a reliable source of electricity in an emergency, Poland's ability to use fossil fuels for this, rather than benefiting from renewable energy pricing mechanisms elsewhere, casts doubt on how effectively Poland will decarbonize its energy mix. .
Poland relies heavily on coal to meet its energy needs. The International Energy Agency noted in a 2021 report that Poland's coal power generation capacity is as high as 129,684GWh, while the power generation capacity of natural gas, the second largest source of electricity, is only 1,574GWh. Renewable energy generated less than 23,000GWh of electricity, of which solar energy only contributed 3,949GWh. The future use of coal-fired power stations will do nothing to address this imbalance.
Marta Anczewska, an energy systems policy expert at the European Climate Action Network, an NGO working to accelerate the clean energy transition, said: "It is disappointing that at the COP28 meeting in Dubai, just when EU representatives were arguing for improvements to the A day after the fight to phase out fossil fuels, the EU cannot walk the talk."
"We need all policies aligned with tackling the climate crisis and an end to harmful fossil fuel subsidies."