An exchange of views with Commissioner Kadri Simson

Shortly after the publication of the electricity market reform, the EEF had the pleasure of welcoming Commissioner Kadri Simson for an insightful discussion on the proposal.

This timely debate was chaired by EEF President, MEP Jerzy Buzek, who welcomed all participants and underlined the importance of the topic in understanding how to respond to the crisis we are currently living.

Commissioner Kadri Simson opened the discussion by highlighting how the reform builds from the strengths of the existing electricity market framework which was, however, severely challenged by the outbreak of the energy crisis in Europe.

After the adoption of several emergency packages, the proposed legislation aims at defining long-term strategies and structural rules to tackle the one big problem of the existing framework: the importance given to short-term markets, highly characterized by volatility and having gas as the main source of flexibility. In this regard, she underlined how the proposal represents a critical tool in achieving the EU industry’s competitiveness and the transition to a green economy in the long run. Indeed, also considering the expected growth in electricity demand by 2030, it aims at designing a more stable and reliable power system.

Commissioner Simson outlined some of the key elements of the reform. First of all, she presented the central role of Power Purchase Agreements in making forward markets more liquid. Secondly, she illustrated the importance of accelerating renewable generation by means of investment and incentives for flexibility. In this respect, Member States will have to foster the use of Contracts for Difference, demand-side response and storage. Finally, she emphasized the need to strengthen consumers protection, by giving them the possibility to choose from a variety of contracts, and to have both the tools to better manage risks and a new model of energy sharing.

The reform was adopted together with the Net-Zero Industry Act and the Critical Raw Materials Act, two other cornerstone legislations to make the EU fit for the clean energy transition. Given the high dependence on third countries for both clean tech products and critical raw materials, the proposals also aim at improving the EU energy security by making supply chains more resilient.

Commissioner Simson’s keynote speech was followed by a lively Q&A session with EEF Active and Associate Members in the audience. The questions first addressed the potential outlook of the electricity market in 2050, the short-term impacts of the reform for consumers and businesses, and the overlap with the Clean Energy Package provisions. The interventions then focused on the enhancement of flexibility solutions, the role of nuclear and coal in the energy mix, the importance of investments in the grid, the repercussions of the US Inflation Reduction Act on Europe and the relationship between the proposed Contracts for Difference and state aid rules.