Electricity Market Design reform: consumer and producer perspectives

27Jun
2023
Dinner debate in Brussels

Chaired by Radan Kanev MEP, Active Member of the EEF

Speakers
Marco Mensink
, Director General, Cefic
Giles Dickson, CEO, WindEurope
Walburga Hemetsberger, CEO, SolarPower Europe

Electricity Market Design reform: consumer and producer perspectives

Brussels, 27 06 2023

Chair

Radan Kanev MEP, Active Member of the EEF

Speakers

Nicola Rega, Executive Director Climate Change and Energy, Cefic

Giles Dickson, CEO, WindEurope

Walburga Hemetsberger, CEO, SolarPower Europe

Radan Kanev MEP, Active Member of the EEF welcomed participants to this follow-up energy debate on the Electricity Market Design reform, underlining the importance of discussing the role of Power Purchase Agreements (PPAs). In his introduction, Mr Kanev already posed some questions to the speakers concerning their relevance in the market, their potential, obstacles and challenges.

Nicola Rega, Executive Director Climate Change and Energy, Cefic presented the view of the European chemical industry, the largest electricity consumer in Europe, quite active in the PPA market. Mr Rega illustrated that PPAs are relevant because they reduce both the price and volume risks. He focused on two main obstacles to their uptake: on the one hand, matching a flat electricity demand from his sector with variable renewable supply; on the other, finding the right contract profile. He also pointed out that the situation is even more complicated for SMEs, which do not consume the same amounts of electricity as large companies. To improve the situation, Mr Rega suggested to facilitate the access to aggregation services and to foster guarantees of origin also to help the industry remain competitive.

Giles Dickson, CEO, WindEurope explained that to increase the share of wind energy from the current 17% to 43% in 2030, the wind industry will face consistent bottlenecks: problems with grid interconnections; a lack of supply chains in Europe which could be eased with the inclusion of non-price criteria in auctions; the absence of the correct investment signals. According to Mr Dickson, more PPAs are being signed both by large consumers from the private and public sectors and by small consumers through aggregation. Besides, they can cover either the whole output of a wind farm or just part of it. However, he pointed out that the lack of stability in the market represents a significant obstacle to their uptake. To improve the situation, Mr Dickson suggested that PPAs and CfDs are placed on an equal footing. He also proposed to remove all barriers to guarantees of origin. He concluded by asking not to extend the revenue cap.

Walburga Hemetsberger, CEO, SolarPower Europe provided an overview of solar power development in Europe, which reached 40 GW in 2022 and is expected to represent 60 GW in 2023 and 1 TW by 2030. In achieving this objective, Ms Hemetsberger considers that PPAs can play a major role, as they do not put any burden on the public sector, but they foster private investments in renewables. She underlined that, in those countries where auctions do not exist, like Bulgaria, PPAs have the potential of drawing up renewables to consumers. As there is a multitude of business models, she also mentioned the relevance of corporate sourcing, and how energy sharing could involve large corporates as well. Finally, MS Hemetsberger mentioned three aspects that could make the PPA market thrive: preserving the business environment without being too prescriptive; ensuring that also smaller companies are given the opportunity to sign PPAs by de-risking contracts; opening opportunities in the market.

Nicolás González Casares MEP (S&D, Spain) – ITRE Rapporteur on EMD reform presented an overview of the ongoing ITRE shadow meetings, which are aiming at increasing the ambition of the Commission’s proposal. With respect to PPAs and CfDs, he underlined the need to reinforce these mechanisms and to make them more transparent, as well as more accessible to all industries. Mr Casares explained that the possibility to standardise PPAs should be foreseen in the legislation, although not mandatory. He also discussed some other relevant aspects of the reform including emergency measures, capacity mechanisms and energy sharing.

The debate continued during the Q&A session where our speakers engaged in an exchange with EEF Members providing the perspective of ferrous and non-ferrous metal industries and of DSOs. It was also an opportunity to discuss about the need for skilled labour force, about the scaling up renewables to make electricity cheaper for consumers, and about CfDs.