“Energy effective solutions for the EU – let’s talk about Energy Market Design Reform”
Date: Tuesday, 21st of March
Place: Business &Science Poland Office, Rue Belliard 40, Brussels
AGENDA
13.00 – 13.15
Welcoming the guests
Katarzyna Lachowicz, Director of BSP Branch in Brussels
Opening speech
Janusz Wojciechowski, European Commissioner for Agriculture
13.15 – 15.00
Panel discussion
Armen Konrad Artwich, Member of the Management Board for Corporate Affairs, PKN ORLEN S.A.
Prof. Bogusław Liberadzki, Member of the European Parliament
Aleksandra Baranska, Policy Officer, Directorate General for Energy of the European Commission
Cillian O’Donoghue, Policy Director, Eurelectric
Conall Heussaff, Research Assistant, Energy and Climate Policy, Bruegel
Moderator: Daniel Czyżewski, Editor Energetyka24.com
About conference:
In its objectives, the EU single energy market was to integrate and liberalise the Member States’ gas and electricity markets so that they would become globally competitive and contribute to the development of the European economy. Since the Russian invasion of Ukraine, the market has been undergoing profound structural changes. The energy crisis has caused, among other things, instability in the raw materials market and a significant increase in EU energy prices and has shown how vulnerable the current electricity market structure is and what consequences this has. The Union has applied a number of ad hoc solutions to stabilise the situation. However, it appears that a profound transformation is needed to achieve a responsible, climate-compatible EU secure energy model characterised by fair market access, with market-based supply prices and adequate interconnection and generation capacity.
Given the growing demand for electricity and the increasing share of renewable energy, structural reform of the electricity market seems to be a necessity.
During the debate, we want to:
– learn the point of view of sectors that have been hit hard by the energy crisis and consider whether the proposed shape of the electricity market corresponds to the demand of selected sectors of the economy
– consider to what extent the proposed changes will contribute to increased investment in renewable energy sources, grid infrastructure and energy storage systems to ensure the stability of the electricity system
– consider whether the market is ready for the challenge of increased capacity and intermittent renewable generation
– consider whether the reform will promote competitive electricity prices and ensure certainty of investment in RES.
„Energy effective solutions for the EU – let’s talk about Energy Market Design Reform”
Business & Science Poland, 21st March 2023, Brussels
The Union of Employers Business and Science Poland (BSP) is actively involved in the discussion on the shape of the European electricity market. That topic will dominate the EU agenda for the coming months. Today, a few days after the publication of the European Commission’s proposal, BSP organised a cross-cutting debate on the impact of the proposed regulations on various sectors of the economy. The debate has been attended by Maciej Gołubiewski, Head of the Cabinet of the Commissioner for Agriculture Janusz Wojciechowski, Professor Bogusław Liberadzki, Member of the European Parliament, Armen Konrad Artwich, Member of the Management Board of PKN ORLEN, Anna Barańska from the EC Directorate-General for Energy, Cillian O’Donoghue representing the industry association Eurelectric, and Conall Heussaff expert at the Belgian Bruegel organization, which is responsible for the policy research on economic and energy issues.
The European single electricity market was intended to consolidate and liberalize the gas and electricity markets of the Member States so that they would become globally competitive and contribute to the development of the European economy. The energy crisis caused, i.a. by Russia’s uncompetitive actions in the gas market even before the aggression against Ukraine, which was further aggravated after the 24th of February 2022, led to a sharp and unprecedented increase in gas and electricity prices. Therefore, the prices of CO2 emission allowances have risen. The European Commission’s response is to be a review of the structure of the electricity market proposed on the 14th of March 2023, providing, i.a. single energy market and changes to the way it is managed, including increasing the use of RES and reducing the dependence of energy prices on fossil commodity prices.
The debate was an opportunity to discuss the issues raised in the context of the planned changes in the electricity market model, whether the reform protects the EU against another energy crisis if the electricity market needs profound changes, and which, if any, the possible market model: interventionist or liberal, will be more conducive to investments into clean renewable energy sources. Businesses, European institutions, the electricity industry and European think tanks, were able to present their perspective.
“High and volatile energy costs in the EU affect all social groups and sectors of our economy, including the agricultural sector, the entire agri-food supply chain, as well as fertilizers,” said Maciej Golubiewski. “The production of nitrogen fertilizers, the most commonly used fertilizers, requires gas. Their price depends largely on the price of natural gas.”
Aleksandra Baranska discussed the thrust of the reform proposal presented by the European Commission last week: „Our proposal will basically facilitate the accelerated rollout of renewables. What renewable producers need is certainty, and a predictable and stable investment climate which our proposal is going to offer to them. (…) We want to boost and increase the role of the long-term market and especially the role of long-term contracts such as PPAs and CfDs but we also increased the role of forward markets and at the same time empower consumers to be more active in energy sharing or to decrease self-consumption”.
Professor Boguslaw Liberadzki stressed the importance of integrating the European Union on energy issues when „we do not have enough gas, coal and other natural resources. We have the technology, the demand, the skills and the resources, such as sun and wind”. In turn, Conall Heussaff said that „Domestic energy production is very valuable, not only because it is low-carbon, but also because it is domestic and not subject to geopolitical manipulation”.
Energy security is an overriding consideration in shaping the electricity market. As the role of coal will diminish significantly year by year, the key technology to diversify controllable sources will be gas-fired power generation in the interim. Armen Konrad Artwich concluded: „When we talk about RES, we have to think not only about photovoltaic and wind systems but also about bioenergy sources, all the elements that will ensure the stability of the energy system in Europe. The decisions we make today as an energy market will be shaped in 30-40 years.”
As the current regulatory framework for long-term instruments has proved insufficient to protect large industrial customers or SMEs from excessive price volatility, the European Commission has proposed supplementing the rules with tools to encourage long-term contracts: power purchase/sale agreements (PPAs) and contracts for difference (CFDs). According to Cillian O’Donoghue, „the reform should first and foremost focus on the further development of long-term markets, but keep what works: a wholesale market based on marginal prices.” (…) „There is no need to completely change the system. However, national barriers to PPAs and other non-mandatory long-term contracts should be eliminated.”
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