Opening remarks by Commissioner Simson at the press conference on the reform of the EU's electricity market design

Ladies and Gentlemen, good afternoon.

The Commission has today adopted a revision to the European electricity market design.

This revision was announced by President von der Leyen last September, and we have today finalized this key proposal to complement the many other reforms this Commission has proposed to cushion the impacts of the energy crisis during the past year.

Our today's reform package includes the revised Electricity Regulation, the Electricity Directive and the REMIT Regulation.

For over two decades, the electricity market design has served European companies and consumers well, letting them enjoy the benefits of a single market.

However, the energy crisis spurred by Russia's attack on Ukraine exposed a number of shortcomings in the current system which needed to be addressed.

The current framework has focused too much on short-term markets.

In many national markets, there are hardly forward instruments with a maturity beyond three years. The dominance of the short-term market has amplified the effects of the gas price rise, and has been the source of various problems during the crisis.

This has been felt by consumers, who have been exposed to wholesale prices that are too often dictated by the price of gas- fired power plants. They have not been able to benefit from the growing share of lower-cost renewables.

The current market system falls short also as we are getting ready to decarbonise our electricity market. By 2030, we will need much more electricity to power our economy, and this electricity should be coming increasingly from intermittent renewables.

To stay on track to meet our Green Deal targets, the EU should triple its renewables deployment rate, therefore this reform contains a number of measures to improve the renewables' investment conditions.

European consumers have been hit by high bills due to dynamic contracts linked to spot prices, while some retailers, not hedging their trade, have gone bankrupt when spot prices at wholesale level skyrocketed, leaving thousands of consumers stranded.

Our today's proposals address the above mentioned shortcomings and will make the European electricity market fit for future.

The measures we are proposing today will have an impact on three areas:

First, the reforms will aim to make the energy bills of the European consumers and companies more independent from the short-term market prices.

To decouple consumer prices from the short-term markets, we propose to expand the role of long-term instruments. We introduce measures to boost the market for power purchase agreements, and  enhance the flexibility of the electricity system through storage and demand response measures.

Second, the reforms will accelerate the deployment of renewables.

We will require the Member States to use two-way  contracts for difference when they grant subsidies to new investment intended to promote new low-carbon and renewable generation.

The revenues from these contracts will have to be channelled back to all end-consumers to reduce their final electricity bills.

This will stabilise the prices for producers and ensure that consumers can benefit more directly from lower costs renewables.

Third, the reform will improve consumer protection.

We will allow consumers to have more than one meter and different contracts to serve their electric vehicle, heat pumps or domestic consumption. We introduce a right to energy sharing.

With these proposals, we believe that in the coming years our consumers will be more protected.

Today's reform is part and parcel of the ongoing competitiveness debate.

Energy prices are one of the key factors that companies consider before deciding where to invest.

This reform will preserve the benefits of   an integrated single European electricity market. And the measures we are proposing today will gradually help reduce the costs of producing and using energy in Europe, through more renewables. 

We are improving the access to markets to more stable longer-term contracts through Power Purchase Agreements, which can drive investment in renewables – which is essential so that we will reach our Green Deal goals.

The two-way Contracts for Difference, where Member States guarantee a stable price to producers and consumers, will foster support for new renewable energy investment.

These two instruments will be key to enhancing the stability and predictability of energy costs across the EU and therefore essential in boosting EU's competitiveness.

It is fitting that today's decision was taken here in the European Parliament. Ideally, this marks the transition from Art 122 crisis emergency legislation, to more structural reforms turned towards the future. It is now for the co-legislators to negotiate this reform so that it can become law.

I call on the Parliament to treat this file as a priority so that we can conclude the work on this essential – and hopefully last! – piece of our legislative response to the energy crisis as soon as possible.

Thank you.