Changes and proposals of the European electricity market regulation

Changes and proposals of the European electricity market regulation

EMD Proposal

On March 14, 2022, the European Commission revealed its proposal to improve the European Union's electricity market design. The proposal introduces reforms to optimize the electricity market design while preserving the main structure and amends several regulations, including Regulation (EU) 2019/943 and Directive (EU) 2019/944 on the internal market for electricity, Regulation (EU) No 1227/2011 on wholesale energy market integrity and transparency (REMIT Regulation), and Regulation (EU) 2019/942, establishing a European Union Agency for the Cooperation of Energy Regulators (ACER Regulation). The proposal does not contain extreme measures such as market split, retroactive CfDs to existing projects, and extending temporary measures introduced last year, but introduces several reforms to improve the market design.

The main points of the proposal include Contracts for Difference (CfDs), PPAs, Flexibility, Demand side response, storage, and capacity mechanisms, peak shaving products, tariff changes to support flexibility services, and dedicated metering devices.

EU / Net Zero Industry Act, Critical Raw Materials Act and European Hydrogen Bank

Net Zero Industry Act:

  1.  The policy aims to strengthen the resilience and competitiveness of net-zero technology manufacturing in the EU by setting enabling conditions, accelerating CO2 capture, facilitating access to markets, enhancing skills, and fostering innovation through regulatory sandboxes.

  2. The Act applies to specific net-zero technologies, including solar photovoltaic and solar thermal technologies, onshore and offshore wind technologies, battery technologies, heat pumps and geothermal energy, renewable hydrogen technologies, biomethane technologies, and CCUS and grid technologies. The policy also aims to increase the Union's overall strategic net-zero technologies manufacturing capacity to at least 40% of the Union's deployment needs by 2030.

Critical Raw Material Act:

  1.  The policy aims to secure the supply chains of critical and strategic raw materials in the EU by setting clear benchmarks for domestic capacities along the strategic raw material supply chain and diversifying EU supply by 2030. The benchmarks include at least 10% of the EU's annual consumption for extraction, at least 40% of the EU's annual consumption for processing, and at least 15% of the EU's annual consumption for recycling.

  2. The Act also aims to limit the dependence on single third countries by not allowing more than 65% of the Union's annual consumption of each strategic raw material at any relevant stage of processing from a single third country.

The European Commission has released a roadmap for the creation of a European Hydrogen Bank that would encourage private investments in the production and use of renewable hydrogen in Europe and beyond. The bank aims to create a market for renewable hydrogen in Europe by 2030 and would support the development of a wide range of hydrogen-related projects such as production, distribution, storage, and use. The Commission's roadmap includes a public consultation to gather feedback from stakeholders and potential investors, and a feasibility study to assess the bank's economic and financial viability.

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