EU plans reforms to shield household bills from massive market swings
To The Of Goal Make By Market Shield The Emergency Tools Of Cuts Gas Formerly Of More Russia, Biggest Energy The Expiration Europe’s Is After Provider The Was The Impact Reform Which Resilient To Adopted Supply
The European Union plans to encourage governments and companies to use more stable, long-term power market contracts to avoid massive price swings as part of a reform demanded by member states following the unprecedented energy crisis[/ur].
The European Commission wants to keep the marginal pricing model and avoid drastic changes to the market design in a bid to ensure predictability and keep electricity flowing freely across the continent, according to a draft plan. The Commission’s proposal is due to be unveiled next week.
The goal of the reform is to make the energy market more resilient after the expiration of emergency tools adopted to shield the impact of gas supply cuts by Russia, which was formerly Europe’s biggest provider.
Top objectives include shielding consumers from soaring prices, weakening the link between electricity and natural gas, and spurring the development of renewable energy.
Under the current EU electricity market design, gas sets the price for all power that’s sold into the market. That means consumers are bearing the brunt of Russia’s supply reduction after its invasion of Ukraine, and their bills don’t reflect the growing share of low-cost renewables like wind farms that get to sell at big margins.
The Commission is planning to weaken the link between gas and power by an increased use of power purchase agreements and so-called contracts for difference, where governments can guarantee investors a fixed price.