The European Energy Exchange (EEX) has welcomed the adoption of the Electricity Directive and Regulation by the European Parliament.
This is a milestone which finalises the ‘Clean Energy Package’ (CEP). The CEP sets the cornerstone for the further development of a market-based energy system with an increasing share of renewables in Europe in the coming decade. Following this route provides a basis for Europe to deliver on its climate and energy policy targets at the lowest cost, and making it possible to find the best solutions to the broader mega trends of decentralisation, decarbonisation and digitalisation.
“The Clean Energy Package explicitly calls on exchanges to continue developing new products for the energy market of the future, and recognises the role of long-term markets to deliver the energy transition,” says Peter Reitz (pictured), Chief Executive Officer of EEX. “The CEP states that regulatory changes must take into account effects on both short and long-term markets and products. Acknowledging the fundamental importance of long-term markets is crucial in particular for the further development of markets for Power Purchase Agreements and when assessing bidding zone design”.
On the reconfiguration of bidding zones, EEX and market participants have always stressed the paramount importance of a long enough implementation phase to allow all stakeholders (market participants, transmission system operators, exchanges, etc.) to adapt to the new situation. While not setting a specific time frame, the CEP also in this respect calls for taking into account effects on derivatives markets.
The package also introduces a requirement for Member States to reserve at least 70 per cent of net transmission capacity for cross-zonal trade from 2020 on. Member States not meeting this benchmark can submit an action plan for solving structural congestion and fulfilling the target by the end of 2025. Still missing this benchmark would start a process for bidding zone reconfiguration. “This procedure provides additional clarity and defines expectations for Member States,” adds Reitz.
The CEP also takes important steps to further integrate renewable energies into the market. With a steadily increasing share of renewables in the European energy system, these technologies also have to participate in the energy market on equal footing. Balancing responsibility, together with free price formation, is the basis for renewable producers to increasingly earn money on the market.
EEX however criticises that the package does not set a phase-out date for all regulated prices. Member States may still continue to apply them for a period of 10 years from entry into force of the directive.
