Energy | Working Paper
The 5th EU electricity market reform : a renewable jackpot for all Europeans package?
02 December 2022
We think that the electricity markets that were developed over the last two decades did what they were supposed to do during this crisis: through higher prices, they convey the message that energy is scarce. “Shooting the messenger” is not going to remove the problem. However, we also learned a lot during this crisis on how electricity markets can be completed and complemented with regulatory instruments, which is why we have three recommendations: First recommendation: Enable and incentivize consumers and suppliers to hedge via well-functioning forward markets (which would complete the sequence of electricity markets). Second recommendation: Give consumers access to cheap renewables with Contracts for Difference (CfDs) and Power Purchase Agreements (PPAs) that are compatible with short-term markets. Third recommendation: De-risk the investments in energy resources AND mitigate affordability concerns for consumers by redesigning Capacity Remuneration Mechanisms (CRMs) or by complementing these mechanisms with other regulatory tools. We finally observe that a broader reform could also aim at accelerating the innovations on the consumers’ side envisioned by the Clean Energy Package. These innovations can bring the much-needed flexibility in decarbonized energy systems.
logo cadmus Read it on Cadmus Download in open access

LATEST FSR PUBLICATIONS

Other
After years of record announcements, frantic policy development and the establishment of substantial public support mechanisms, the clean hydrogen sector is nearing an inflexion point. Many clean hydrogen projects have [...]
Other
The safeguarding of critical offshore energy infrastructure has assumed a heightened level of urgency in the wake of the Nord Stream pipeline explosions in September 2022 and the suspected sabotage [...]
Other
The Performance Review Commission (PRC) is an independent body supported by EUROCONTROL with a remit to review and report on European air traffic management (ATM) performance. While performance has improved [...]
Technical report
As part of the LIFE COASE project, the first Net Zero Carbon Market Policy Dialogue (NZCMPD) was held in September 2023 to discuss the latest developments and challenges faced by [...]
Other
- This policy brief reviews some of the latest studies on distributional and competitiveness effects that were presented at the International Conference on Ex-Post Evaluation of Emissions Trading organised under [...]
Other
- This policy brief synthesises the results from the first annual workshop on ex-ante assessment of emissions trading. It focuses on models assessing the schemes in the EU, UK, China, [...]

Join our community

To meet, discuss and learn in the channel that suits you best.

scroll

top