EC proposed reform of the EU electricity market

On 14 March 2023, the European Commission presented its proposals for reforming the EU’s electricity market design, supporting hedging and market-based price mechanisms to address volatility of wholesale electricity prices. Besides PPA, energy sharing and forward markets, the reform promotes especially the recourse to two-way CfD to allow the generator for a revenue guarantee for the electricity produced but with an upward limitation when market prices are high. The Commission also announced the probable end of inframarginal cap and recommends revaluing the importance of OPEX, in order to encourage further non-fossil flexibility services for renewable integration. Consumers are also at the centre of the reform with the Commission allowing for limited national price setting intervention, mandatory offer of fixed contract and a designated supply of last resort.