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Competition and market dynamics form basis for consumers to benefit from the Energy Union

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The European Energy Exchange (EEX) and the European EPEX SPOT power exchange have met with representatives of the EU Commission and the Federal Ministry for Economic Affairs at the “E-world energy & water” trade fair to discuss the legislative proposals of the so-called “Winter package” (Clean energy for all Europeans) of the EU Commission.

This is a package consisting of eight directives and regulations intended to safeguard the competitiveness of the European energy market in view of global changes.
The Energy Union aimed at in this framework paves the way for the European power market design of the future. European citizens are to benefit from an integrated, flexible and sustainable power generation system.
The European power market and the underlying political framework conditions are to be developed further in order to be able to cost-efficiently produce even bigger volumes of renewable energy and integrate these into the power market in the future.
Dr Tobias Paulun (pictured), chief strategy officer of EEX, says: “The winter package can become a success if the European internal power market actually benefits the consumers throughout Europe in the future. This includes more renewable energies at costs which are as low as possible and the highest possible security of supply. Consumers should, in particular, be able to decide freely whether they want to procure their power from a certain supplier or want to actively operate as producers – ie as so-called prosumers.”
Dr Wolfram Vogel, director public & regulatory affairs of EPEX SPOT, says: “The achievement of the European energy and climate targets necessarily requires functioning and liquid spot and derivatives markets. These will ensure the required transparency and form the basis for participation in the European energy turnaround. Therefore, EPEX SPOT welcomes the strengthening of the wholesale market provided for in the winter package and the further removal of barriers for border-crossing power trading.”
As seen from the perspective of EEX and EPEX, the basic trend and most of the proposals of the winter package can be assessed as being positive. They reflect the confidence in competitive and market-based principles. In particular, the proposal of strengthening the market price signal as a central control element by expressly recognising scarcity signals and excluding regulatory interventions in pricing is positive. The exchanges welcome, in particular, the principle that all players on the power market are to align their activities to the price signals of the market and, in so doing, make a contribution to the security of supply by assuming balancing group responsibility.
However, the exchanges still see a need for change with regard to some of the measures proposed.
Paulun says: “The winter package provides for new, more restrictive measures regarding the definition of market areas. However, this is contrary to the concept of an energy union and contradicts the aim of an integrated European market. Instead and for the benefit of the consumers, the EU Commission should be guided by the vision that because of increasing volumes of renewable energy, an increasingly volatile power supply will require a large-scale interconnection of the markets to safeguard fair pricing.”
Vogel adds: “The harmonisation of the balancing power markets which the Commission provides for can be assessed as being positive on principle. However, this must not be done at the expense of Intraday markets.”

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