In a communication published today, the Commission proposes a phasing-out of regulated electricity prices and is critical of capacity payments. Both regulated prices and capacity payments are major obstacles to a properly functioning EU energy market. But the Commission does not put enough emphasis on tackling these issues and other major structural market distortions.
“Regulated prices, fossil fuel and nuclear subsidies, market concentration and lack of market transparency are the main problems that need to be tackled urgently” said Paul Wilczek, EWEA Senior Regulatory Affairs Advisor. “The communication focuses too much on renewable energy support mechanisms and not enough on the most critical distortions. It's very disappointing to see the EU making such slow progress towards an internal energy market 20 years after the European single market was set up.”
The communication also lacks proposals for further developing the internal energy market after 2014 - in particular developing markets for grid support services, and rolling out intraday markets and balancing markets across the EU. This is disappointing given their importance for the cost-effective integration of large quantities of wind energy.
“However, the European Commission is right to be critical of capacity payments, which are a disincentive to invest in urgently needed grid infrastructure and create another distortion to the energy market” Wilczek added.
The European wind industry is very strongly in favour of a single market in electricity and has been critical of the slow progress towards it. The actions proposed today by the European Commission will not be able to stop the EU missing its 2014 deadline.