European Union Plans Energy Market Overhaul to Halt Cost of Renewables

Power & Energy

Despite the industry warnings that the reforms could stifle investment in wind and solar farms, European Union energy commissioner Kadri Simson stated that Brussels plans to overhaul the bloc’s electricity market to prioritize cheaper renewable power.

According to Kadri Simson, the European Commission is working under extraordinary conditions and delivering faster than the European Commission typically does. The region is battling its most difficult energy crisis in decades, and the commission is under strong political pressure to redesign the market to cut customer bills.

Kadri Simson went on to say that the European Commission was looking into ways to get consumers to use more renewable energy. Gas-fired power plants will also be needed, but we don’t want to set up a system where they run all the time.

The European Commission proposes in a draft that the energy source for a wind farm or solar power plant should be virtually free in order to better reflect the true production costs of renewable energy. Additionally, it proposes extending a windfall tax on renewable power companies that is set to expire in 2023 and is passed on to customers.

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After months of pressure from several EU member states, particularly France and Spain, which urged the European Commission to end a system in which the price of all power generated is determined by the region’s most expensive fuel, proposals to improve the electricity market were made.

The “merit order” model prioritizes renewable and nuclear power over gas and coal to meet electricity demand first. This has encouraged investment in renewable energy, which has benefited from the rise in gas prices. However, despite the lower production costs of renewable energy, consumers are paying a high price for it.

Sandy

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