EU unveils electricity reforms to reduce price spike threat

EU unveils electricity reforms to reduce price spike threat

The proposals wouldn't  completely decouple electricity prices from volatile fossil fuel prices
The proposals wouldn't completely decouple electricity prices from volatile fossil fuel prices. Photo: LOIC VENANCE / AFP/File
Source: AFP

PAY ATTENTION: Enjoy reading our stories? Join YEN.com.gh's Telegram channel for more!

The EU laid out plans Tuesday to make electricity bills "less dependent" on fossil fuel costs, to limit the risks of price hikes like those seen after Russia invaded Ukraine.

Brussels has been working on reforming its electricity market since Moscow's war sent prices spiralling for individual consumers and businesses last year.

Wholesale energy prices in Europe are set according to the cost of the most expensive sources, usually gas-powered plants, those flexible enough to cover jumps in demand.

Gas prices rocketed after Russian President Vladimir Putin sent in his troops, taking EU electricity costs with them and leaving governments scrambling to compensate consumers.

"For over two decades the electricity market design has served European companies and consumers, letting them enjoy the benefits of a single market," said European energy commissioner Kadri Simson.

"However, the crisis spurred by Russia's attack on Ukraine exposed a number of shortcomings in the current system which needed to be addressed."

Read also

ECB seen hiking rates again, but for how much longer?

PAY ATTENTION: Follow us on Instagram - get the most important news directly in your favourite app!

Some countries including France and Spain had called for a total overhaul of the system and to decouple the price of electricity from that of gas entirely.

But the measures put forward by the EU's executive arm -- details of which now have to be negotiated between the European parliament and member states -- fall short of those demands.

Instead of a clean break, they aim to reduce the impact of volatile fossil fuel costs by pushing long-term contracts for renewable energy.

For citizens the reforms would introduce new rights to secure long-term fixed-price contracts from their energy supplier, cutting their exposure to sharp rises.

They would also be allowed to have more than one meter and different contracts to more economically serve their varying needs from charging a vehicle, to using heat pumps.

Read also

UK economic rebound eases recession fear before budget

The EU is looking to bolster the use of so-called power purchase agreements that allow companies to benefit more easily from the more stable costs of non-fossil power.

Power producers would be offered security through the more widespread use of government contracts that would see them pay back revenues if the prices spike and get compensation if they fall.

Brussels hopes the moves will bolster investment in non-fossil fuel energy as the EU seeks to meet its climate goals to reach net-zero and keep electricity cost down.

The bloc says it needs to triple the rate at which it is putting up new renewable energy infrastructure if it wants to hit its green targets.

New feature: Сheck out news that is picked for YOU ➡️ click on “Recommended for you” and enjoy!

Source: AFP

Authors:
AFP avatar

AFP AFP text, photo, graphic, audio or video material shall not be published, broadcast, rewritten for broadcast or publication or redistributed directly or indirectly in any medium. AFP news material may not be stored in whole or in part in a computer or otherwise except for personal and non-commercial use. AFP will not be held liable for any delays, inaccuracies, errors or omissions in any AFP news material or in transmission or delivery of all or any part thereof or for any damages whatsoever. As a newswire service, AFP does not obtain releases from subjects, individuals, groups or entities contained in its photographs, videos, graphics or quoted in its texts. Further, no clearance is obtained from the owners of any trademarks or copyrighted materials whose marks and materials are included in AFP material. Therefore you will be solely responsible for obtaining any and all necessary releases from whatever individuals and/or entities necessary for any uses of AFP material.