Use the Internal Energy Market as a tool to manage the current crisis and to shape the sector going forward. This was the call in a letter to politicians ahead of this week’s European Council meeting.
The letter, co-signed by Eurelectric, emphasised the importance of the Internal Energy Market for affordability, security of supply, and decarbonisation. Furthermore, it stressed that a recent Final Assessment of the EU Electricity Market Design by the Agency for the Cooperation of Energy Regulators (ACER) found that the market is delivering on its objectives.
In addition, it highlighted that European market integration last year delivered €34 billion in savings on the electricity side. It also set out that interventions in the market, particularly around wholesale energy price formation, risk distorting it. This, it said, will reduce the benefits that energy markets can deliver.
The co-signatories advised policymakers to support vulnerable consumers exposed to high energy prices. They called for reduced taxes and levies, energy vouchers or the use of revenues from Emission Allowance auctions to achieve this goal.
Moreover, the letter emphasised that the current crisis also requires the redoubling of efforts to shift away from carbon-intensive energy production, invest massively in clean energy alternatives, accelerate energy savings and unlock demand response.
Stable policy framework
In addition, a stable policy framework, both at national and European levels, would provide the certainty vital for channelling the required volumes of private investments into renewable energy, carbon-neutral energy supply and infrastructure.
Elsewhere, the letter advised decision-makers to avoid changing the current electricity price-setting mechanism. Short-term interventions such as wholesale or retail price control measures can lead to differing national rules which:
- Increase the costs of contingency measures for consumers in the long run.
- Distort the supply/demand balance for gas or electricity and threaten security of supply.
- Damage existing efforts and investment signals to decarbonise the energy sector.
Any national interventions being considered should be limited in time, scope, and effect on the Internal Energy Market, it said. The letter cited the REPowerEU package, stating that proposals should be subject to a thorough cost-benefit analysis. In addition, Member States should consult the energy industry before making any decisions.
Don’t miss our session on energy prices on Day 1 of the Power Summit. See the full programme.