Windmill and power pole


At yesterday’s council of energy ministers in Brussels, the 28 EU energy ministers adopted the ‘Clean Energy for all Europeans’ legislative package, including two electricity market dossiers, the Governance Regulation and the revised version of the Renewable Energy Directive.

State Secretary Rainer Baake said: “The ‘Clean Energy for all Europeans’ package adopted by the Energy Council is a milestone. It reshapes almost the entire European energy framework. We struggled well into the night in order to set a common course for a ‘European energy transition’. The package makes the renewables fit for the electricity market, and makes the electricity market more flexible and thus fit for the renewables. Our definition of energy security is no longer purely national, but European. And that is a good thing, because if we balance supply and demand right across Europe, we need less capacity. Ultimately, the consumers benefit from this. The role of the consumer in general is strengthened, and the consumer is to play a more active part on the electricity market in future. Use of what are known as ‘capacity markets’ to solve energy security issues is only permitted on a temporary basis. The driving force for investment and innovation will stem from free price formation, the approach we have also taken for the Electricity Market 2.0 in Germany. New coal-fired power plants will not be allowed to take part in these capacity markets from the end of 2025, and existing power plants will not be allowed to take part from the end of 2030. The output is to be cut each year between 2025 and 2030.”

One key issue was the future implications of congestion within individual Member States which restricts electricity trading with neighbouring countries. A new procedure has been adopted for this: the Member States must gradually open up their interconnectors for more and more European electricity trading. A target figure of 75% has been set, to be attained by the end of 2025. The Member States can decide themselves how to achieve this: by reducing their bidding zones or adopting a plan to modernise and expand the grids, as well as ‘redispatch’ measures to tackle any remaining congestion. If the Member States fail to achieve this gradual opening up of their interconnectors, the Commission can take measures and ultimately require that the bidding zones be divided up.

State Secretary Baake added: “The new procedure to handle internal grid congestion gives the Member States time to upgrade their grids. But it also makes it clear that the Member States will have to stop living with their internal congestion.”

State Secretary Baake also stressed the importance of the new regulation on the governance of the Energy Union. For the first time, the Member States are establishing an instrument for long-term planning and monitoring to help them attain the objectives of the Energy Union. The core element is integrated national energy and climate plans for all 28 Member States, as well as a mechanism for a situation in which the voluntary contributions by the Member States do not suffice to meet the EU objectives (the ‘gap-filler’ mechanism). Reliable intermediate steps have been agreed for renewables as follows: 24% of the EU target must be attained in 2023, 40% in 2025 and 60% in 2027. If the EU is not on course to hit the target, those Member States which find themselves below these reference points must take additional action.

State Secretary Baake underlined: “I am glad that we have now agreed on clear rules on how we can actually attain the EU targets we have adopted. However, the importance of the new governance rules for the Energy Union extends beyond the 2030 energy and climate targets. For the first time, one of the world’s largest economic zones is providing itself with a joint plan on how the Member States wish to contribute to long-term decarbonisation and energy security in Europe. If we get it right, this can become one of Europe’s greatest innovation and investment projects.”

The European Commission presented the ‘Clean Energy for all Europeans’ legislative package at the end of November 2016. It consists of four directives and four regulations. Yesterday, the EU’s energy ministers adopted policy agreements (‘general approaches’) for the Electricity Market Directive, the Electricity Market Regulation, the Governance Regulation and the revision of the Renewable Energy Directive. A regulation on cooperation in the field of risk-preparedness had already been adopted in advance. Agreement has yet to be reached on the regulation on the tasks of the Agency for the Cooperation of Energy Regulators (ACER). The Energy Efficiency Directive and the Energy Performance of Buildings Directive were adopted back in June. Next year, negotiations will continue on these dossiers in the trilogue procedure between the Council and the European Parliament.