Best Conference 2021


Market design “worth keeping”

The EU’s market design is “worth keeping” as it allows for efficient and secure electricity supply under normal market conditions.

These were the findings of last week’s report by the EU Agency for the Cooperation of Energy Regulators (ACER). The study was requested by the European Commission at the start of the energy crisis.

The price hikes have had a significant impact on consumers. They had also triggered political debate across Europe on whether market adjustments were needed.

ACER’s report provides clarity to policymakers who had been investigating solutions to keep electricity prices down.

In its study, the agency blamed the problem of higher electricity costs on the price of gas – not market design.

However, it acknowledged that improvements could be made to future-proof the current structure.

ACER’s 13 recommendations for policymakers included:

– Speeding up electricity market integration, implementing what is already agreed

  • – Improving access to renewable Power Purchase Agreements (PPAs)
  • – Stimulating ‘market making’ to increase liquidity in long-term markets
  • – Shielding consumers that need the most protection from price volatility.

The agency also said that the more interventionist the approach, the greater the chance of market distortion.

If market interventions are required in extreme situations, ACER advised policymakers to consider tackling the “root causes’ instead.

The issue of high prices is set to be on the agenda of EU leaders during their extraordinary meeting later this month.