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An agreement on the European electricity market reform

Intense negotiations took place, now an agreement on the EU electricity market reform has been reached. It became necessary following the electricity price crisis as a consequence of the Russian invasion of Ukraine. The goal: protect private households from extreme high energy prices, reduce price fluctuations, and strengthen the competitiveness of renewable energies.
In the future, surplus profits from clean electricity can be redistributed in the long term by the member states through contracts for differences (CfDs). Long-term green electricity supply contracts (PPAs) will be secured.
The two-sided contracts for differences aim to guarantee stable prices and planning security for producers. Subsidies can be granted for wind, solar hydropower, geothermal, and nuclear energy. Alternative support mechanisms for renewables such as Germany's sliding feed-in premium, are also possible.
However, as with CfDs, prices must be capped here too. CfDs are also possible for repowered plants and expansion or lifetime extension of operating plants. This was particularly important to France, as it allows the existing fleet of nuclear power plants to be subsidised. Critics fear that this could guarantee a very low electricity price for industry in France and distort competition.
The Commission is therefore now to review the promotion of existing plants under competition law. An exemption for coal in certain circumstances, which was introduced at Poland's insistence, also remains controversial.
Other crucial points of the reform: Consumer rights will be strengthened; a price reduction in the event of a price crisis will be possible for households and SMEs in need; energy sharing of clean electricity will be facilitated.
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About FES Just Climate

FES Just Climate acts as a think tank about current and coming trends, and a policy advisor in ongoing debates. We support FES offices and their partners in shaping the industrial revolution of our times. We focus on energy, industrial, structural and labor policies, and the European Green Deal.

In the future, climate and social policymust be two sides of the same European coin. We need to develop climate-neutral energy systems and industries. Simultaneously, we need to safeguard and strengthen the welfare state, local participation and workers’ rights.We shall be working on this with our political, trade union and civil society partners, as well as other think tanks.

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