Private investment is key to delivering Europe’s energy independence and clean ambitions. Stable and well-functioning markets are a necessary precondition to attract private capital to invest and efficiently integrate new variable renewable energy sources (RES) into the electricity system.
Encouraging investments in flexibility, digitalisation and upgrading and reinforcing electricity networks help optimise the electricity system, reducing costly market interventions. Electricity system costs are increasing with variable RES due to curtailment and redispatching. More flexibility, digitalisation and pre-emptive network investments are the answer to this, with electrification spreading costs across a greater number of consumers and delivering the benefits of clean electricity.
Locational investment signals could be implemented. These signals might be included as a component in support schemes for new generation or through network connection charges. An improved bidding zone review process should include full stakeholder engagement, based on long-term scenarios and considering multiple options for bidding zone reconfigurations.
Eurelectric does not support a move to locational marginal pricing in Europe. This would lead to significant disruption in Europe’s electricity market and create uncertainty for new and existing assets alike.
Any reform of the governance of the European electricity market should focus on simplification, transparency, and coordination, rather than creating new entities or adding additional complexity.