Spanish non-paper on electricity market functioning
1 min read

Spanish non-paper on electricity market functioning

As the European Commission is expected to open a consultation on the functioning of electricity markets, the Spanish government has recently circulated a non-paper outlining its perspective.

Walburga Hemetsberger, CEO of SolarPower Europe:

"SolarPower Europe agrees with the analysis in the non-paper that Europe must strengthen its resilience to external shocks in the field of electricity market functioning. The only way to do that is by strengthening the Internal Energy Market for electricity and providing a stable regulatory framework that accelerates investments in renewables and flexibility, replacing fossil fuels in electricity markets as soon as possible.

However, any proposals in the direction of central planification by the government, and de facto mandatory Contracts for Difference must be treated very carefully as it creates a dynamic incompatible with the Internal Energy Market, leading to system inefficiencies and higher costs to consumers.

Some questions will deserve a thorough examination. Is the concept of non-contestable resources applicable to renewables, and how are possible retroactive CfDs adequate with investors certainty? Further, with a generation mix under Contracts for Difference, is there still room for retailers to develop innovative renewable supply solutions for consumers, like self-consumption or 24/7 renewable Power Purchase Agreements?

As Europe aims to come out stronger from the energy crisis, it would be appropriate to look at proportionate measures tailored to the challenge of making electricity market more robust and fossil free. That is all the more important in the context of the US Inflation Reduction Act and the new competition for clean energy investment that Europe is confronted with."

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