2023-10-18 19:39:57
The 27 member countries of the European Union reached an agreement on Tuesday October 17 on the reform of the electricity market. The objective: to respond to the surge in electricity prices over the past year.
The long negotiations finally resulted in an agreement. Tuesday evening, the Energy Ministers of the 27 member countries of the European Union reached an agreement on the reform of the electricity market, awaited for many months, due to differences between France and Germany. Only Hungary voted once morest the project.
The agreement aimed to find ways to bring down the “volatility of electricity prices”, following the explosion of bills across Europe since the start of the war in Ukraine. This market reform plans in particular to reduce the bills of households and businesses thanks to a system of long-term contracts, which should smooth out the consequences of the volatility of gas prices.
The 27 found a common position on the obligation of “contracts for difference” (CFD), which are contracts established between States and electricity suppliers, at a price guaranteed by the State.
A concrete effect to contain prices
Concretely, if the price of the courses rises above the price set by the public authorities, energy suppliers will have to pay the surplus back to the States, which will in turn be able to pay this revenue to consumers to reduce their bills. Conversely, if prices fall below the set price, the States will compensate the suppliers. This system should make it possible to give more visibility to investors, and to promote investments in the production of carbon-free energy.
If the European Union took some time to reach this agreement, it is in particular because of the confrontation between France and Germany over the place of nuclear power in this project. Indeed, Germany, now out of nuclear power, did not want French nuclear power plants to benefit from investments generated by CFDs to prolong their existence.
Berlin has long claimed that this might constitute unfair competition, since French power plants would become more competitive. France, for its part, saw CFDs as a way to renovate its aging energy fleet in order to continue to offer low prices for consumers.
Tariff shields in the event of a crisis
Finally, the agreement reached on Tuesday provides that CFDs will not be compulsory in existing nuclear power plants.
The text also provides for a crisis mechanism in the event of a new price explosion, allowing member states to put in place a price shield to protect households and businesses.
It’s done ! Agreement reached on the reform of the European electricity market between the 27 member states, following a day of final discussions. For consumers, for a massive investment in renewables and for the preservation of French nuclear power. pic.twitter.com/RI9Hs3x3z1
— Agnès Pannier-Runacher (@AgnesRunacher) October 17, 2023
“It’s done ! Agreement reached on the reform of the European electricity market between the 27 Member States, following a day of final discussions. For consumers, for a massive investment in renewables and for the preservation of French nuclear power,” rejoiced the French Minister of Energy Transition, Agnès Pannier-Runacher, on X.
The text on which European ministers agreed must now be debated in the European Parliament.
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