Future proof the market framework now to deliver on decarbonisation, says EURELECTRIC in Florence

08 March 2016

Opening the 30th Florence Forum on 3-4 March, Commissioner Arias Cañete highlighted the main building blocks of the upcoming legislative proposals on market design, which will seek to ensure that energy markets are fit to the low-carbon transition.

EURELECTRIC welcomed the Commission’s declared intention to identify measures that allow for proper scarcity pricing. “Currently, scarcity pricing is insufficient to provide the investment signals that ensure long-term system adequacy”, said Juan Jose Alba Rios, Chairman of EURELECTRIC’s Markets Committee. “We need to remove price caps but the key issue is subsidies and other interventions that distort the merit order”, he added. In addition, EURELECTRIC reiterated its call for enhanced market functioning as a clear no-regret option, in particular concerning short-term markets. For instance, further steps are needed beyond the implementation of the balancing guideline to coordinate the sizing and cross-border sharing of reserve capacity.

EURELECTRIC also supported the call to develop a “regional framework for capacity mechanisms” to ensure that they are based on common features, and in particular on a “common approach to assessing the level of system adequacy”. “Regional system adequacy assessments based on harmonised metrics shall inform the decisions to introduce capacity markets. All stakeholders, including market participants, must be involved in the definition of the assessments’ methodology”, said Mr. Alba Rios.

Last but not least, EURELECTRIC stressed the importance of closer regional TSO cooperation to strengthen market integration and system optimisation. “A step-wise regional integration of system operation and planning tasks for cross-border trade needs to happen”, stressed Mr. Alba Rios. “Such a process should build upon the ongoing establishment of Regional Security Coordination Initiatives Service Providers towards gradually allocating responsibilities to regional entities”. EURELECTRIC also urged to increase transparency in TSOs’ cross-border capacity availability calculations to end with undue limitations with the aim of solving internal congestions.

 

Background:

The Electricity Regulatory Forum, or Florence Forum, is organised by the European Commission and brings together stakeholders from the electricity sector to discuss progress towards the EU's objective of achieving an internal market for electricity.  Meetings are usually held twice a year over a two-day period. EURELECTRIC is regularly invited to share its views.

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