The EU Commission’s Proposal for Improving the Electricity Market Design: Treading Water, but not Drowning
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40518_2023_Article_223.pdf
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Author(s)
Batlle, Carlos
Schittekatte, Tim
Mastropietro, Paolo
Rodilla, Pablo
Date Issued
August 2, 2023
Publisher
Springer International Publishing
Citation
Batlle, Carlos, Schittekatte, Tim, Mastropietro, Paolo and Rodilla, Pablo. 2023. "The EU Commission’s Proposal for Improving the Electricity Market Design: Treading Water, but not Drowning."
Version
Final published version
Abstract
Abstract
Purpose of Review
On March 14, 2023, the European Commission (EC) published the much awaited “Proposal for a regulation (…) to improve the Union’s electricity market design.” The proposed regulation reflects the verdict of the EC after several months of fervent debate triggered by the energy crisis that has affected the European region. In this paper, we discuss several crucial elements that are part of the proposed regulation.
Recent Findings
In a nutshell, we deem the EC has done a great job managing a highly complicated situation. The proposal preserves the crucial role of short-term electricity markets and puts the focus on the key flaw: the perennial incompleteness of long-term power markets. The EC has put forward a large battery of measures, covering different dimensions and with very different potential impacts on the market design.
Summary
Here we focus on what we consider to be the four key elements of the proposal: (i) the promotion of long-term contracting, (ii) interventions during electricity price crises, (iii) the strategy for an efficient supplier risk management, and (iv) flexibility support schemes and capacity remuneration mechanisms.
MIT Department
MIT Energy Initiative
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Creative Commons Attribution
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DOI of Published Version
https://doi.org/10.1007/s40518-023-00223-4
