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Press releases 05 May 2023

R&I, policy and industry unite to discuss EU Electricity Market Design reform in last SUPEERA webinar

On 26 April 2023, the last SUPEERA’s policy webinar “A future-proof EU electricity market: the role of R&I in taking up the challenge” took place online. The session gathered more than 130 participants, including key EU policymakers, representatives of industry, civil society and research, and allowed the audience to share their perspectives and participate in the discussion through interactive questions & answers sessions.

The event featured a set of distinguished speakers, namely Mathilde Lallemand-Dupuy, Policy Officer at the European Commission, Vilislava Ivanova, Research Manager at E3G, Charlotte Renaud, Head of Unit, Wholesale and Retail Market Issues at Eurelectric and Laurens de Vries, Coordinator of the EERA Joint Programme on Energy Systems Integration (ESI).

Key outcomes of the discussion:

The session was introduced by EERA Senior Policy Officer Rosita Zilli, who presented EERA and the SUPEERA project. Then, Ms Zilli opened the floor with a series of ice-breaking questions aimed at getting to know the audience’s background and expectations. The majority of the attending participants revealed to have a background in Research and Academia or Industry and expressed an interest in gathering in-depth R&I challenges and industrial opportunities connected to the topic of the webinar and obtaining intelligence insights on the evolving legislative file.

The panel discussion was moderated by EERA Secretary-General Adel El Gammal, who introduced the first speaker, Mathilde Lallemand-Dupuy, who provided a general overview of the main elements of the Electricity Market Design (EMD) reform. In particular, she highlighted that European Commission’s proposal is built on three pillars: protecting consumers, enhancing price stability and predictability, and accelerating the roll-out of renewables with flexibility services. The Policy Officer went through the measures proposed to address each of these issues, explaining how they would contribute to the strengthening of the future electricity market.

The second speaker, Vilislava Ivanova, addressed the needs in terms of R&I by energy systems: basic research; feasibility; development; demonstration; and test, launch and operation. However, Ms Ivanova pointed out also that research should concern not only new technologies but also new business models and social innovation research (energy sharing, energy communities). The Research Manager from E3G also outlined the R&I challenges ahead as well as the opportunities that arise from this reform, such as the flexibility assessment and the national flexibility target, moving trade closer to real-time and energy sharing. Digitalisation, she added, may represent both a challenge and an opportunity, as either way, the transition is partly dependent on it. Lastly, Ms Ivanova focused on the synergies between research and industry, including delivery challenges; the move from testing to commercialisation; the development of the required skills; and socio-economic research, including an analysis of the imperfections of the policy instruments and their consequences.

Charlotte Renaud presented the work of Eurelectric and explained why this reform is needed. Indeed, considering the necessity for more investments in power generation (which will double by 2030) and grids to decarbonise, it is essential to ensure an adequate framework. Ms Renaud pointed out that electrification will be the driver for decarbonising other sectors, including heating, transport and energy-intensive industries. Thus, the energy market, which nevertheless proved itself strong during the recent crisis, will have to be further improved. In particular, the crisis made explicit that the price of fossil fuel generation excessively impacts short-term markets. Eurelectric’s position, explained Ms Renaud, is based on two principles:  preserving the elements that work, as the marginal price method, and developing long-term markets to protect consumers against excessive price vulnerability and foster investments. After having listed some suggestions for her organisation to improve the electricity market, she made a brief assessment of the Commission’s proposal. The fact that this reform represents an evolution of the existing market, not a revolution, and that the emergency measures were not institutionalised was particularly appreciated by Eurelectric.

The last speaker, Laurens de Vries, provided a view from the research community. While he recognised that the current design works, he stressed the need to improve investment security and consumer protection. After having outlined what is needed to achieve a low-carbon electricity market, Mr De Vries explained the key research challenges ahead. These include the need to proceed to the development and deployment of new technologies simultaneously, a better understanding of imperfect markets to de-risk investments, a system in transition and system integration. De Vries explained that, so far, all research approaches have shown some deficiencies and further research is needed to develop an infrastructure vision. Lastly, he went through the market design challenges, explaining the modelling requirements that each would entail.

Follow-up Discussion:

The discussion explored the aforementioned topics in more depth.

On the possibility of regulating the electricity market, Laurens de Vries insisted on the necessity of designing a robust market fit for future challenges. Providing consumers with a hedge and giving them more agency could contribute. Alternatives include, for instance, passive subscription and reliability options.

Speakers then discussed the role of governments and municipal authorities in developing R&I priorities for the electricity market of the future. In this context, Vilislava Ivanova, clarified the need to link the R&I actions to the solution of concrete clean energy transition challenges. Then, the debate concerned how to translate new measures into clear, simple guidance for consumers. Charlotte Renaud presented the results of a study by Eurelectric, which shows that most customers are unwilling or unable to embark on the energy transition. According to her, suppliers will have to be engaged in the communication challenge to explain the opportunity.

EERA Secretary-General Adel El Gammal brought up the issue of the resilience of the electricity market in the long run by stating that policymakers should refrain from making assumptions over the stability of certain conditions, for instance, the continued relatively low costs of renewable energy. Mr El Gammal thus asked the panel to what extent these assumptions are taken into consideration when designing the model. Mathilde Lallemand-Dupuy agreed on the pressing need to react to this crisis but, at the same time, of taking into consideration the fact that the reform of the electricity market will last more than the present emergency and that only solutions that will make it also fit for other future challenges should be incorporated. Lastly, the Commission’s Policy Officer outlined the next steps in the act’s legislative process by saying that trialogues are expected to take place already in the summer.

The recording of the webinar is available at this link.