More energy security through stronger market integration

A new energy market design is strategically needed for the achievement of a true EU Energy Union. A sustainable energy system is key to a strong industry and Europe's future success in international competition. These are the conclusions of a Report adopted today by the European Parliament that highlights that only stronger market integration can ensure more energy security for the EU. “The EPP Group welcomes that Member States will keep the responsibility of security of supply but at the same time, should commonly assess their capacities and flexibilities. We demand that the Agency for the Cooperation of Energy Regulators (ACER) is given the power of decision-making to increase coordination for regional cooperation and interregional issues”, said Werner Langen MEP, Rapporteur of the New Energy Market Design Report.

Europe’s electricity system is facing huge challenges, especially through the integration of renewables into the electricity system. The share of electricity produced by renewables will grow from 25 percent today to 50 percent in 2030. This means that even more electricity will have to be traded across national borders which requires efficient cooperation from all market actors. The grids need to have the capacity for cross-border cooperation to reflect the increasing variability of production so that sufficient energy can flow across Europe even when the sun is not shining or the wind not blowing.

One of the main focuses of the Report is the elimination of regulated prices and unnecessary support schemes: “We therefore need the gradual phasing-out of subsidies for mature renewable technologies as a number of these technologies are rapidly becoming cost-competitive with conventional forms of generation”, said Langen, explaining that the same applies in respect to national protection mechanisms such as capacity markets. “Capacity markets, when they are no longer necessary or badly designed, lead to distortions of competition and excessive prices and are a barrier to cross-border trade. They should only be allowed when they are designed in a way that allows cross-border participation and if they are based on a prior detailed regional adequacy analysis of the regional production and supply situation”, added Langen.

After today’s vote, the European Commission has to now submit its legislative proposal on the revision of the European energy market before the end of this year. “The Report gives clear indications to the European Commission and proposes important solutions for the challenges that have been hindering a common European market for energy until now”, Langen concluded.