Brussels brings forward to tomorrow its proposal for an electricity market focused on long-term contracts

The European Commission has brought forward from Thursday to Tuesday its proposal for a reform of the electricity market focused on increasing the presence of renewables to the detriment of fossil fuels and facilitating long-term contracts to reduce price volatility to protect consumers, as already defended by Spain in the approach it presented to Brussels last January.

According to the draft to which Europa Press has had access and which is subject to change until its official publication, Brussels encourages Member States to "strive" to create the right market conditions for long-term market-based instruments, such as power purchase agreements.

These are bilateral purchase agreements between energy producers, in particular renewable energy producers, and trading companies, which, the text highlights, "provide long-term price stability for the consumer and the necessary certainty for the producer to make the decision to invest."

Once the Commission has officially presented its proposal, it will be up to the Council and the Parliament to endorse it at the level of both Member States and political groups, before the final negotiation again with Brussels and with the aim of starting to implement it in the first half of 2024.

However, in contrast to the structural reform advocated by countries such as Spain, another bloc of seven countries led by Germany is demanding that the review of the electricity market be "limited" and that it maintain the benefits reported by the system in the last decade and that it not compromise the EU's climate and energy objectives, two opposing positions that augur a lengthy debate at the EU-27 level.

After announcing last Thursday a relaxation of state aid to allow EU countries to match offers from third parties to avoid the flight of companies, Brussels will also present this week the law for a zero emissions industry and the regulation of critical raw materials, two complementary regulations that seek to prevent business migration and achieve European self-sufficiency in the production of new technologies while reducing CO2 emissions.

All these measures are part of Brussels' plan to counteract the impact on the European economy of the injections of the US Inflation Reduction Act (IRA), with a package of 369 billion dollars, and the investments in clean technologies announced by China, which exceed 280 billion dollars.