Opinion of the European Committee of the Regions — Electricity market design
Date: 2023-07-06
Institutions: Commission for the Environment, Climate Change and Energy, European Committee of the Regions
Subjects: consumer protection, electricity supply, energy cooperation, energy efficiency, market stabilisation, market supervision, price of energy, renewable energy, security of supply, single market




C_202300253EN.000101.fmx.xml












Official Journal of the European Union


EN
Series C













C/2023/253


26.10.2023






Opinion of the European Committee of the Regions — Electricity market design
(C/2023/253)













Rapporteur:



Josef FREY (DE/Greens), Member of Baden-Württemberg State Parliament





Reference document:



Proposal for a Regulation of the European Parliament and of the Council amending Regulations (EU) 2019/943 and (EU) 2019/942 as well as Directives (EU) 2018/2001 and (EU) 2019/944 to improve the Union’s electricity market design — COM(2023) 148 final








I.   RECOMMENDATIONS FOR AMENDMENTS


Amendment 1

Recital 1a (new)






Text proposed by the European Commission


CoR amendment




 




The green energy transition requires stronger involvement of citizens on the local level. Therefore, local and regional authorities shall develop climate-friendly energy supply roadmaps for their region, facilitate integrated network planning for electricity, heat and gases, facilitate citizen involvement for network and generation infrastructure and develop at local and regional level ‘one stop shops’ to facilitate customers a fair access to new energy schemes, technical assistance and regulatory support.







Reason

Involving citizens is key for achieving the energy transition. Local and regional authorities shall be tasked to enable the energy transition on local and regional level by taking local responsibility and offering services to the citizens.

Amendment 2

Recital 1b (new)






Text proposed by the European Commission


CoR amendment




 




Energy prices have escalated since 2021 with very negative social and economic consequences. There is an urgent need to protect consumers in the face of rising energy prices, to deal with rising volatility and improve transparency in the price formation process.







Reason

The energy crisis illustrates the need for better consumer protection in order to cope with adverse social and economic impact.

Amendment 3

Recital 7






Text proposed by the European Commission


CoR amendment




The current electricity market design has also helped the emergence of new and innovative products, services and measures on retail electricity markets, supporting energy efficiency and renewable energy uptake and enhancing choice so as to help consumers reduce their energy bills also through small-scale generation installations and emerging services for providing demand response. Building on and seizing the potential of the digitalisation of the energy system, such as active participation by consumers, should be a key element of our future electricity markets and systems. At the same time, there is a need to respect consumer choices and allow consumers to benefit from a variety of contract offers.


The current electricity market design has also helped the emergence of new and innovative products, 
particularly at local and regional level,
 services and measures on retail electricity markets, supporting energy efficiency and renewable energy uptake and enhancing choice so as to help consumers reduce their energy bills also through small-scale generation installations, and emerging services for providing demand response. Building on and seizing the potential of the digitalisation of the energy system, such as active participation by consumers, should be a key element of our future electricity markets and systems. At the same time, there is a need to respect consumer choices and allow consumers to benefit from a variety of contract offers.





Reason

The regional and local levels have become increasingly relevant e.g. in respect of aggregation of small flexible units and in exploring local flexibility mechanisms and in supporting the provision of knowledge and access to verifiable information.

Amendment 4

New recital 8






Text proposed by the European Commission


CoR amendment




 




The involvement of local and regional authorities in facilitating the energy transition at local level and ensuring participation of all citizens and the industry at local level can bring added value to a proper functioning of a new electricity market where the local level and distribution systems are playing a key role. In the context of the current energy challenges, a decentralised scheme is more suitable to facilitate the deployment of renewable energies.







Reason

Local and regional authorities have a key role in the energy transition at local and regional level, among other things for developing and implementing roadmaps to achieve the energy transition and facilitating the involvement of citizens and local industry in the energy transition.

Amendment 5

Recital 10






Text proposed by the European Commission


CoR amendment




The changes to the electricity market design should ensure that the benefits from rising renewable power deployment, and the energy transition as a whole, are brought to consumers, 
including
 the most vulnerable ones, and 
ultimately
, shield them from energy crises and avoid more households falling into energy poverty trap. These should mitigate the impact of high fossil fuel prices, notably that of gas, on electricity prices, aiming to allow households and companies to reap the benefits of affordable and secure energy from sustainable renewable and low carbon sources in the longer term.


The changes to the electricity market design should ensure that the benefits from rising renewable power deployment, and the energy transition as a whole, are brought to consumers, 
especially
 the most vulnerable ones, and
, first and foremost
, shield them from energy crises and avoid more households falling into energy poverty trap. These should mitigate the impact of high fossil fuel prices, notably that of gas, on electricity prices, aiming to allow households and companies to reap the benefits of affordable and secure energy from sustainable renewable and low carbon sources in the longer term.





Reason

The Regulation should be extended to all consumers, giving priority to vulnerable consumers. Protection must be extended to all circumstances of electricity production and sale, responding first and foremost to situations at critical moments.

Amendment 6

Recital 11






Text proposed by the European Commission


CoR amendment




The 
reform of the
 electricity market design should benefit 
not just household
 consumers 
but also
 the competitiveness of the Union’s industries by facilitating their possibilities to make the clean tech investments they require to meet their net zero transition paths. The energy transition in the Union needs to be supported by a strong clean technology manufacturing basis. These reforms will support the affordable electrification of industry and the Union’s position as a global leader in terms of research and innovation in clean energy technologies.


The 
provision of
 electricity 
is a basic service to fulfil basic needs. The electricity system is part of the critical infrastructure. This electricity market design reform
 should benefit consumers, 
the technical security of the system, and
 the competitiveness of the Union’s industries by facilitating their possibilities to make the clean tech investments they require to 
make
 their transition 
towards the decarbonisation targets.
 The energy transition in the Union needs to be supported by a strong clean technology manufacturing basis, 
consumer engagement, access to clean technologies for all consumers and better understanding of local and regional needs
. These reforms 
should also
 support the affordable electrification of 
the economy
 and the Union’s position as a global leader in terms of research and innovation in clean energy technologies.





Reason

Local and regional authorities can contribute to a better understanding of the economic sectors concerned, always safeguarding the technical functioning of the electricity system and thus maximising the integration of renewable electricity production.

Amendment 7

Recital 28






Text proposed by the European Commission


CoR amendment




According to Article 15(8) of Directive (EU) 2018/2001 of the European Parliament and of the Council, Member States are to assess the regulatory and administrative barriers to long-term renewables PPAs, and shall remove unjustified barriers to, and promote the uptake of, such agreements. In addition, Member States are to describe policies and measures facilitating the uptake of renewables PPAs in their integrated national energy and climate plans. Without prejudice to that obligation to report on the regulatory context affecting the PPA market, Member States should ensure that instruments to reduce the financial risks associated to the buyer defaulting on its long-term payment obligations in the framework of PPAs are accessible to companies that face entry barriers to the PPA market and are not in financial difficulty in line with Articles 107 and 108 TFEU. Member States could decide to set up a guarantee scheme at market prices. Member States 
should
 include provisions to avoid lowering the liquidity in the electricity markets, such as by using financial PPAs. Member States should not provide support to PPAs that purchase generation from fossil fuels. While the default approach should be non-discrimination between consumers, Member States could decide to target these instruments to specific categories of consumers, applying objective and non-discriminatory criteria. In this framework, Member States should take into account the potential role of instruments provided at Union level, for instance by the European Investment Bank (‘EIB’).


According to Article 15(8) of Directive (EU) 2018/2001 of the European Parliament and of the Council, Member States are to assess the regulatory and administrative barriers to long-term renewables PPAs, and shall remove unjustified barriers to, and promote the uptake of, such agreements. In addition, Member States
, with contributions from local and regional authorities,
 are to describe policies and measures facilitating the uptake of renewables PPAs in their integrated national energy and climate plans. Without prejudice to that obligation to report on the regulatory context affecting the PPA market, Member States should ensure that instruments to reduce the financial risks associated to the buyer defaulting on its long-term payment obligations in the framework of PPAs are accessible to companies that face entry barriers to the PPA market and are not in financial difficulty in line with Articles 107 and 108 TFEU. Member States could decide to set up a guarantee scheme at market prices. Member States 
shall
 include provisions to avoid lowering the liquidity in the electricity markets, such as by using financial PPAs. Member States should not provide support to PPAs that purchase generation from fossil fuels. While the default approach should be non-discrimination between consumers, Member States could decide to target these instruments to specific categories of consumers, applying objective and non-discriminatory criteria. In this framework, Member States should take into account the potential role of instruments provided at Union level, for instance by the European Investment Bank (‘EIB’).





Reason

Local and regional authorities have a key role in order to involve consumers at local and regional level. Making the inclusion of provisions to avoid lowering the liquidity in the electricity market mandatory.

Amendment 8

Recital 34






Text proposed by the European Commission


CoR amendment




Thanks to the upward limitation of the market revenues direct price support schemes in the form of two-way contracts for difference should provide an additional source of revenues for Member States in periods of high energy prices. To further mitigate the impact of high electricity prices on the energy bills of consumers, Member States should ensure that the revenues collected from producers subject to direct price support schemes in the form of two-way contracts for difference 
are


passed on to all final electricity customers, including households, SMEs and industrial consumers, based on their consumption.
 The redistribution of revenues should be done in a way that ensures that consumers are still to some extent exposed to the price signal, so that they reduce their consumption when the prices are high, or shift it to periods of lower prices (which are typically periods with a higher share of RES production). Member States should ensure that the level playing-field and competition between the different suppliers is not affected by the redistribution of revenues to the final electricity consumers.


Thanks to the upward limitation of the market revenues direct price support schemes in the form of two-way contracts for difference should provide an additional source of revenues for Member States in periods of high energy prices. To further mitigate the impact of high electricity prices on the energy bills of consumers, Member States should ensure that the revenues collected from producers subject to direct price support schemes in the form of two-way contracts for difference 
should be used to finance the support mechanism. Additional revenues shall be allocated to support vulnerable consumers, low-income households or vulnerable industrial consumers, or to enable local and regional authorities
. The redistribution of revenues should be done in a way that ensures that consumers are still to some extent exposed to the price signal, so that they reduce their consumption when the prices are high, or shift it to periods of lower prices (which are typically periods with a higher share of RES production). Member States should ensure that the level playing-field and competition between the different suppliers is not affected by the redistribution of revenues to the final electricity consumers.





Reason

The income from two-way contracts for difference should be used to finance the support mechanism. Additional revenues should be used in a targeted manner for those who need it most and where it can create the largest benefits for the energy transition.

Amendment 9

Recital 44






Text proposed by the European Commission


CoR amendment




Consumers should have access to a wide range of offers so that they can choose a contract according to their needs. However, suppliers have reduced their offers, fixed-price contracts have become scarce, and the choice of offers has become limited. Consumers should always have the possibility to opt for an affordable fixed price and fixed term contract and suppliers should not unilaterally modify the terms and conditions before such contract expires.


Consumers should have access to a wide range of offers 
and transparent information
 so that they can choose a contract according to their needs. However, suppliers have reduced their offers, fixed-price contracts have become scarce, 
consumers are rarely aware of the different implications of fixed price contracts and variable price contracts
 and the choice of offers has become limited. Consumers should always have the possibility to opt for an affordable fixed price and fixed term contract and suppliers should not 
be able to
 unilaterally modify the terms and conditions before such contract expires.





Reason

Consumers need to be able to receive transparent information on the offers available, whether at fixed or variable prices, in the most transparent manner possible. One-stop shops organized by local and regional authorities can help consumers find the most affordable and suitable electricity supply contracts.

Amendment 10

Recital 52






Text proposed by the European Commission


CoR amendment




Vulnerable customers should be adequately protected from electricity disconnections and should, as well, not be put in a position that forces them to disconnect. The role of suppliers and all relevant national authorities to identify appropriate measures, in both the short and the long-term, which should be made available to vulnerable customers to manage their energy use and costs remain essential, including by means of close cooperation with social security systems.


Vulnerable customers 
and low-income households
 should be adequately protected from electricity disconnections and should, as well, not be put in a position that forces them to disconnect. The role of suppliers and all relevant national
, regional and local
 authorities to identify appropriate measures, in both the short and the long-term, which should be made available to vulnerable customers 
and low-income households
 to manage 
rational
 energy use and 
associated
 costs, remain essential, including by means of close cooperation with social security systems.





Reason

Local and regional authorities can contribute to identifying the best measures to manage the efficient and rational use of energy and associated costs for vulnerable customers and low-income households.


Article 1 — Amendments to Regulation (EU) 2019/943 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity

                      (1)


Amendment 11

Article 1 point (a)






Text proposed by the European Commission


CoR amendment




 




point (a) is replaced by the following:









‘(a)




set the basis for an efficient achievement of the objectives of the Energy Union and the goal of achieving climate neutrality by 2050 at the latest, within the climate and energy framework currently set for 2030 by enabling market signals to be delivered for increased efficiency, higher share of renewable energy sources, security of supply, flexibility, sustainability, decarbonisation and innovation;’










Reason

The goal of achieving climate neutrality targets by 2050 requires the energy sector to already be a nearly decarbonised electricity sector by 2030 which thus explains the urgency of implementing the right tools to ensure investments in renewables, energy efficiency and security of supply.

Amendment 12

Article 4






Text proposed by the European Commission


CoR amendment




 




Article 4 is replaced by the following:






‘1.
   
Member States shall put in place national strategies for the progressive reduction of existing coal, fossil gas and other solid fossil fuel generation, mining and transport capacity.






2.
   
The Commission shall support Member States through all available means to enable a just transition in regions affected by structural change. The Commission shall assist Member States in addressing the social and economic impacts of the clean energy transition.






3.
   
The Commission shall work in close partnership with the stakeholders in coal and fossil gas-intensive regions with high carbon emissions, shall facilitate the access to and use of available funds and programmes, and shall encourage the exchange of good practices, including discussions on industrial roadmaps and reskilling needs.’









Reason

All Member States shall have national strategies for reducing existing fossil fuel infrastructure to avoid stranded assets and to achieve the climate targets. The Commission shall especially assist regions affected by structural change.

Amendment 13

Article 7b(2)






Text proposed by the European Commission


Cor amendment






Member States shall establish
 requirements for a dedicated metering device data validation process to check and ensure the quality of the respective data.




The
 requirements for a dedicated metering device data validation process to check and ensure the quality 
and interoperability
 of the respective data 
shall be in compliance with Regulation (EU) 2016/679, Article 23 of Directive (EU) 2019/944 and Network Code for Demand Response
.





Reason

Data protection is one of the main concerns regarding the use of smart metering and dedicated metering device data.

Amendment 14

Article 9(5)






Text proposed by the European Commission


CoR amendment




Where a regulatory authority considers that there are insufficient hedging opportunities available for market participants, and after consultation of relevant financial market competent authorities in case the forward markets concern financial instruments as defined under Article 4(1)(15), it may require power exchanges or transmission system operators to implement additional measures, such as market-making activities, to improve the liquidity of the forward market. Subject to compliance with Union competition law and with Directive (EU) 2014/65 and Regulations (EU) No 648/2012 and (EU) No 600/2014, market operators shall be free to develop forward hedging products, including long-term forward hedging products, to provide market participants, including owners of power-generating facilities using renewable energy sources, with appropriate possibilities for hedging financial risks against price fluctuations. Member States shall not require that such hedging activity may be limited to trades within a Member State or bidding 
zone.




Where a regulatory authority considers that there are insufficient hedging opportunities available for market participants, and after consultation of relevant financial market competent authorities in case the forward markets concern financial instruments as defined under Article 4(1)(15), it may require power exchanges or transmission system operators to implement additional measures, such as market-making activities, to improve the liquidity of the forward market. Subject to compliance with Union competition law and with Directive (EU) 2014/65 and Regulations (EU) No 648/2012 and (EU) No 600/2014, market operators shall be free to develop forward hedging products, including long-term forward hedging products, to provide market participants, including owners of power-generating facilities using renewable energy sources, 
and within that category those using energy sharing
, with appropriate possibilities for hedging financial risks against price fluctuations. Member States shall not require that such hedging activity be limited to trades within a Member State or bidding zone.





Reason

The inclusion of the proposed amendment leaves no doubt that the article applies to energy sharing, a form of energy generation and use applying specifically to domestic consumers and based on clean and renewable energy.

Amendment 15

Article 19b(1)






Text proposed by the European Commission


CoR amendment







1.
   Direct price support schemes for new investments for the generation of electricity from the sources listed in paragraph 2 shall take the form of a two-way contract for differences. New investments for the generation of electricity shall include investments in new power-generating facilities, investments aimed at repowering existing power-generating facilities, investments aimed at extending existing power-generating facilities or at prolonging their lifetime.






1a.
   Direct price support schemes for new investments for the generation of electricity from the sources listed in paragraph 2 shall take the form of a two-way contract for differences
, except for projects equal to or below 1 MW or citizen energy community or renewable energy community projects equal to or below 6 MW.
 New investments for the generation of electricity shall include investments in new power-generating facilities, investments aimed at repowering existing power-generating facilities, investments aimed at extending existing power-generating facilities or at prolonging their lifetime.




1b.
   
The level of direct support in the form of a two-way contract for difference should be determined through a competitive bidding process.








Reason

Direct price support schemes shall be the default support mechanism for new renewable projects. Other support schemes can apply for small generation units. Clarification that competitive bidding processes should be used when allocating support via contracts for difference.

Amendment 16

Article 19b(2)






Text proposed by the European Commission


CoR amendment




Paragraph 1 shall apply to new investments in generation of electricity from the following sources:


Paragraph 1 shall apply to new investments in generation of electricity from the following sources:










(a)


wind energy;












(a)


wind energy;














(b)


solar energy;












(b)


solar energy;














(c)


geothermal energy;












(c)


geothermal energy;














(d)


hydropower 
without reservoir
;












(d)


hydropower 
for net energy produced
;
















(e)






nuclear energy;








 





Reason

Direct price support schemes for new investments shall be open to technologies that are renewable, non-CO2 emitting, low-cost and available for a rapid roll out. Those technologies need to be complemented by flexible resources such as hydrogen power plants, storage, and demand response. Baseload power plants have limited flexibility and thus risk the loss of renewable energy feed-in during times of high renewable production. To achieve a nearly decarbonised electricity system by 2035, the quick build-up of renewable energy generation is key; technologies with long lead times come with a high risk of failing to achieve the climate targets. Decentralised renewable generators allow many municipalities to benefit from the income generated and thus create a fair distribution of revenues while only few municipalities benefit from centralised large power plants, particularly nuclear power which has not yet solved the problems of radioactive waste and missing water for cooling.

Amendment 17

Article 19b(3)






Text proposed by the European Commission


CoR amendment




Direct price support schemes in the form of two-way contracts for difference shall:


Direct price support schemes in the form of two-way contracts for difference shall:










(a)


be designed so that the revenues collected when the market price is above the strike price are distributed to 
all final electricity customers based on their share of consumption (same cost/refund per MWh consumed);














(a)


be designed 
with the aim of cost neutrality,
 so that the revenues collected when the market price is above the strike price are 
used to finance support when the market price is below the strike price. Additional revenues shall be
 distributed to 
vulnerable consumers, low-income households or vulnerable customers in the energy-intensive industries at risk of carbon leakage if they demonstrate significant decarbonisation efforts, or utilised to finance one stop shops at local or regional level as per Article 15b.
















(b)


ensure that the distribution of the revenues to final electricity customers is designed so as not to remove the incentives of consumers to reduce their consumption or shift it to periods when electricity prices are low and not to undermine competition between electricity suppliers;












(b)


ensure that the distribution of the revenues to final electricity customers is designed so as not to remove the incentives of consumers to reduce their consumption or shift it to periods when electricity prices are low and not to undermine competition between electricity suppliers;












(c)






contain locational elements to incentivise new investments in locations that do not lead to additional congestion in the transmission and/or distribution grid or support investments in structurally weak regions;














(d)






reflect system supportiveness of new investments to incentivise investments in locations or technologies with system supportive generation patterns.











Reason

Income from two-way contracts for difference shall be used to finance the support scheme or to support vulnerable consumers. Two-way contracts for difference shall contain locational and system supporting elements to support investments in specific regions and e.g. allow for renewable power plants feeding in during demand peaks.

Amendment 18

Article 19c(4)






Text proposed by the European Commission


CoR amendment




The ENTSO for Electricity and the EU DSO entity shall coordinate transmission and distribution system operators as regards the data and analyses to be provided in accordance with paragraph 2. In particular, they shall:


The ENTSO for Electricity and the EU DSO entity shall coordinate transmission and distribution system operators as regards the data and analyses to be provided in accordance with paragraph 2. In particular, they shall:










(a)


define the type of data and format that transmission and distribution system operators shall provide to the regulatory authorities;












(a)


define the type of data and format that transmission and distribution system operators shall provide to the regulatory authorities;














(b)


develop a methodology for the analysis by transmission and distribution system operators of the flexibility needs, taking into account at least all existing sources of flexibility and planned investments at interconnection, transmission and distribution level 
as well as the need to decarbonise the electricity system.














(b)


develop a methodology for the analysis by transmission and distribution system operators of the flexibility needs, taking into account at least all existing sources of flexibility and planned investments at interconnection, transmission and distribution level. 
The methodology shall be based on power sector decarbonisation scenarios out to at least 2040 that are aligned with 2030 energy efficiency and renewable targets.











Reason

The analysis of flexibility needs shall be aligned with power sector decarbonisation scenarios in line with climate and renewable targets.

Amendment 19

Article 19f






Text proposed by the European Commission


CoR amendment




Flexibility support scheme for non-fossil flexibility such as demand response and storage applied by Member States in accordance with Article 19e(2) and (3) shall:


Flexibility support scheme for non-fossil flexibility such as demand response and storage applied by Member States in accordance with Article 19e(2) and (3) shall:










(a)


not go beyond what is necessary to address the identified flexibility needs in a cost-effective manner;












(a)


not go beyond what is necessary to address the identified flexibility needs in a cost-effective manner;
















(b)




be limited to new investments in non-fossil flexibility such as demand side response and storage;














(b)






be simple, accessible and user-friendly


















(c)




must not imply starting fossil fuel-based generation located behind the metering point;














(c)




be limited to new investments in non-fossil flexibility such as demand side response and storage;
















(d)




select capacity providers by means of an open, transparent, competitive, non-discriminatory and cost-effective process;














(d)




must not imply starting fossil fuel-based generation located behind the metering point;
















(e)




prevent undue distortions to the efficient functioning of the electricity markets including preserving efficient operation incentives and price signals and the exposure to price variation and market risk;














(e)




select capacity providers by means of an open, transparent, competitive, non-discriminatory and cost-effective process;
















(f)




provide incentives for the integration in the electricity market in a market-based and market-responsive way, while avoiding unnecessary distortions of electricity markets as well as taking into account possible system integration costs and grid stability;














(f)




prevent undue distortions to the efficient functioning of the electricity markets including preserving efficient operation incentives and price signals and the exposure to price variation and market risk;
















(g)




set out a minimum level of participation in the market in terms of activated energy, which takes into account the technical specificities of storage and demand response;














(g)




provide incentives for the integration in the electricity market in a market-based and market-responsive way, while avoiding unnecessary distortions of electricity markets as well as taking into account possible system integration costs and grid stability;
















(h)




apply appropriate penalties to capacity providers which do not respect the minimum level of participation in the market referred to in point (g), or which do not follow efficient operation incentives and prices signals;














(h)




set out a minimum level of participation in the market in terms of activated energy, which takes into account the technical specificities of storage and demand response;
















(i)






be open to
 cross-border participation.














(i)




apply appropriate penalties to capacity providers which do not respect the minimum level of participation in the market referred to in point (g), or which do not follow efficient operation incentives and prices signals;








 










j)






allow
 cross-border participation 
on equal conditions
;












(k)






be adapted to local conditions;














(l)






contain locational elements to incentivise new investments in locations that do not lead to additional congestion in the transmission and/or distribution grid or support investments in structurally weak regions.











Reason

Flexibility support schemes shall have a regional component to reflect potential network congestion and to allow for incentivising investments in structurally weak regions.

Amendment 20

Article 19g






Text proposed by the European Commission


CoR amendment




 




The EU renewable energy financing mechanism (Regulation (EU) 2020/1294 on the Union renewable energy financing mechanisms) should provide guarantees for PPAs and tender two-way contracts for difference in case the Commission concludes that the contributions of the Member States are insufficient for the collective achievement of the target according to the Renewables Directive (EU) 2018/2001 of at least 45 % share of energy from renewable sources in the Union’s gross final consumption of energy in 2030 based on its assessment of the integrated national energy and climate plans.







Reason

The EU renewable energy financing mechanism can contribute to identifying and utilising the most efficient renewable projects across Europe, thereby boosting the energy transition. The EU renewable energy financing mechanism should be used to fill potential gaps between the contributions of Member States and the target share of 45 % from renewable sources in the Union’s gross final consumption of energy in 2030 in the Renewables Directive (EU) 2018/2001 of the European Parliament and of the Council. (2)



Article 2 — Amendments to Directive (EU) 2019/944 of the European Parliament and of the Council on common rules for the internal market for electricity

                      (3)


Amendment 21

Article 15a






Text proposed by the European Commission


CoR amendment





1.   All households, small and medium sized enterprises and public bodies have the right to participate in energy sharing as active customers.




1.   All households, small and medium sized enterprises and public bodies have the right to participate in energy sharing as active customers.











(a)


Active customers shall be entitled to share renewable energy between themselves based on private agreements or through a legal entity.












(a)


Active customers shall be entitled to share renewable energy between themselves based on private agreements or through a legal entity.














(b)


Active customers may use a third party that owns or manages for installation, operation, including metering and maintenance a storage or renewable energy generation facility for the purpose of facilitating energy sharing, without that third party being considered an active customer.












(b)


Active customers may use a third party that owns or manages for installation, operation, including metering and maintenance a storage or renewable energy generation facility for the purpose of facilitating energy sharing, without that third party being considered an active customer.














(c)


Member States shall ensure that active customers participating in energy sharing:












(c)


Member States 
in cooperation with local and regional authorities
 shall ensure that active customers participating in energy sharing:














(d)


are entitled to have the shared electricity netted with their total metered consumption within a time interval no longer than the imbalance settlement period 
and without prejudice to applicable taxes
, levies and network charges;












(d)


are entitled to have the shared electricity netted with their total metered consumption within a time interval no longer than the imbalance settlement period. 
Taxes
, levies and network charges 
are to be paid on the shared energy
;














(e)


benefit from all consumer rights and obligations as final customers under this Directive, except in case of energy sharing between households with an installed capacity up to 
10,8  kW
 and up to 
50
 kW for multi-apartment blocks using peer-to-peer trading agreements;












(e)


benefit from all consumer rights and obligations as final customers under this Directive, except in case of energy sharing between households with an installed capacity up to 
30
 kW and up to 
100
 kW for multi-apartment blocks using peer-to-peer trading agreements;














(f)


have access to template contracts with fair and transparent terms and conditions for peer-to-peer trading agreements between households, and for agreements on leasing, renting or investing in storage and renewable energy generation facilities for the purpose of energy sharing; in case of conflicts arising over such agreements, final customers shall have access to out of court dispute settlement in accordance with Article 26;












(f)


have access to template contracts with fair and transparent terms and conditions for peer-to-peer trading agreements between households, and for agreements on leasing, renting or investing in storage and renewable energy generation facilities for the purpose of energy sharing; in case of conflicts arising over such agreements, final customers shall have access to out of court dispute settlement in accordance with Article 26;














(g)


are not subject to unfair and discriminatory treatment by market participants or their balance responsible parties;












(g)


are not subject to unfair and discriminatory treatment by market participants or their balance responsible parties;














(h)


are informed of the possibility for changes in bidding zones in accordance with Article 14 of Regulation (EU) 2019/943 and of the fact that the right to share energy is restricted to 
within one and the same bidding zone.














(h)


are informed of the possibility for changes in bidding zones in accordance with Article 14 of Regulation (EU) 2019/943 and of the fact that the right to share energy is restricted to 
the same and surrounding local or regional administrative units as determined under national law;


















(i)




Member States shall ensure that relevant transmission or distribution system operators or other designated bodies:














(i)






have access to energy advisory services providing relevant data and technical assistance, in particular the Energy Communities Repository and the Rural Energy Communities Advisory Hub;


















(j)




monitor, collect, validate and communicate metering data related to the shared electricity with relevant final customers 
and
 market participants at least every month, and in accordance with Article 23;














(j)






are enabled to participate in digital platforms to obtain information, data and share best practices;


















(k)




provide a relevant contact point to register energy sharing arrangements, receive information on relevant metering points, changes in location and participation, and, where applicable, validate calculation methods in a clear, transparent and timely manner.














(k)






can benefit from targeted network tariffs that reflect the local and regional grid infrastructure effectively used;










 










(l)




Member States shall ensure that relevant transmission or distribution system operators or other designated bodies:








 










(m)




monitor, collect, validate and communicate metering data related to the shared electricity with relevant final customers, market participants at least every month, and in accordance with Article 23;








 










(n)




provide a relevant contact point to register energy sharing arrangements, receive information on relevant metering points, changes in location and participation, and, where applicable, validate calculation methods in a clear, transparent and timely manner.








 










(o)






submit an annual report to the regulatory authority that includes information on the implementation of energy sharing at local level, including the impact on the grid, treatment of information and accessibility to new schemes. The Commission may draw up specific guidance on how to reduce the administrative burden and the regulatory barriers in the field of energy sharing.











2.   Member States shall take appropriate and non-discriminatory measures to ensure that energy poor and vulnerable households can access energy sharing schemes. Those measures may include financial support measures or production allocation quota.




2.   Member States shall take appropriate and non-discriminatory measures to ensure that energy poor and vulnerable households can access energy sharing schemes. Those measures may include financial support measures or production allocation quota.






Reason

Clarification that energy sharing is generally subject to taxes, levies and charges, but that special network charges can apply within the same or neighbouring regional administrative units of the generation unit. An annual report on energy sharing gathers relevant information for future regulation.

Amendment 22

New Article 15b






Text proposed by the European Commission


CoR amendment




 




Article 15b




Public action for the local energy transition






 





1.
   
Local and regional authorities:







 










a)






shall develop a roadmap for climate-friendly energy supply for their region in line with the climate targets;










 










b)






shall facilitate integrated network planning for electricity, heat and gases;










 










c)






shall facilitate citizen involvement during the planning and building of network and generation infrastructure;










 










d)






may invest in energy production facilities and shall contribute as agent for investments, promoting the acceleration of renewables;










 










e)






shall designate appropriate areas for renewables and necessary infrastructure in line with the roadmap for climate-friendly energy supply;










 










f)






shall facilitate the coordination of permission processes for new generation and infrastructure and implement simple, transparent and digital processes;










 










g)






may coordinate the access to electricity supply below costs during an electricity price crisis and shall coordinate the determination of the supplier of last resort.










 





2.
   
Local and regional authorities shall develop ‘one-stop shops’ to facilitate the energy transition. One- stop shops:







 










(a)






shall offer citizens advisory services in respect to affordable energy contracts, energy sharing, energy communities, renewable investments and local energy markets;














(b)






shall offer energy communities regulatory and administrative information including on licensing, permitting and grid connections;














(c)






shall facilitate the bundling of demand for PPAs;














(d)






may offer platforms for energy sharing;














(e)






may offer platforms for registering renewable energy systems.











Reason

Involving citizens is key for achieving the energy transition. Local and regional authorities shall be tasked with enabling the energy transition on local and regional level by taking local responsibility and offering services to the citizens in the region. Facilitating the allocation of electricity below costs to consumers in need is made optional for local and regional authorities. One-stop shops shall also support energy communities with dedicated information.

Amendment 23

New Article 15c






Text proposed by the European Commission


CoR amendment




 





Article 15c





Renewable energy systems below 1 kW





All households have the right to connect renewable energy systems of up to 1 kW for self-consumption without further requirements, except for registering the system in a local or national database and compliance with the applicable electrical safety regulations. Member States shall put in place simple procedures to register these renewable energy systems.








Reason

Small renewable energy systems can contribute to making the consumers less dependent on global commodity prices and create local support for the energy transition. Small renewable energy systems need to be compliant with the applicable electrical safety regulations.

Amendment 24

New Article 15d






Text proposed by the European Commission


CoR amendment




 




Article 15d




Renewable energy communities and ownership






 





1.
   
Renewable energy communities shall:










(a)






benefit from priority use of public spaces for renewable projects;














(b)






benefit from priority treatment for obtaining grid connections for their renewable projects unless the system operator shows that it is more efficient to prioritise other projects for achieving the energy transition;














(c)






benefit from technical assistance and streamlined procedures for energy sharing projects.











 





2.
   
Ownership of renewable energy projects developed by a renewable energy community or built for energy sharing shall be offered to purchase by the energy community, those involved in energy sharing and citizens, local and regional authorities and small and medium enterprises in the respective region.








Reason

Involving citizens is key for achieving the energy transition. Energy communities can have a key contribution in involving citizens and making the energy transition happen on local level. Financial participation allows for sharing profits from the energy transition locally, which will increase support for the transition on local level. Adding conditions for preferential treatment for grid connections for energy communities.

Amendment 25

Article 18a






Text proposed by the European Commission


CoR amendment





1.   National Regulatory Authorities shall ensure that suppliers have in place and implement appropriate hedging strategies to limit the risk of changes in wholesale electricity supply to the economic viability of their contracts with customers, while maintaining liquidity on and price signals from short-term markets.




1.   National Regulatory Authorities shall ensure that suppliers have in place and implement appropriate hedging strategies to limit the risk of changes in wholesale electricity supply to the economic viability of their contracts with customers, while maintaining liquidity on and price signals from short-term markets.






2.   Supplier hedging strategies may include the use of power purchase agreements. Where sufficiently developed markets for power purchase agreements exist which allow effective competition, Member States may require that a share of suppliers’ risk exposure to changes in wholesale electricity prices is covered using power purchase agreements for electricity generated from renewable energy sources 
matching
 the 
duration of their
 risk exposure 
on the consumer side
, subject to compliance with Union competition law.




2.   Supplier hedging strategies may include the use of power purchase agreements. Where sufficiently developed markets for power purchase agreements exist which allow effective competition, Member States may require that a share of suppliers’ risk exposure to changes in wholesale electricity prices is covered using power purchase agreements for electricity generated from renewable energy sources 
belonging to consumers for the duration of the
 risk exposure on the consumer side, subject to compliance with Union competition law.






3.   Member States shall endeavour to ensure the accessibility of hedging products for citizen energy communities and renewable energy communities.




3.   Member States shall endeavour to ensure the accessibility of hedging products for citizen energy communities and renewable energy communities.






Reason

The proposed amendment to the article clarifies the provision for the inclusion of the consumer as an active customer in the electricity market, within the period during which a risk of fluctuating prices exists.

Amendment 26

Article 27(1)






Text proposed by the European Commission


CoR amendment




Member States shall ensure that all household customers, and, where Member States consider it appropriate, small enterprises, enjoy universal service, namely the right to be supplied with electricity of a specified quality within their territory at competitive, easily and clearly comparable, transparent and non-discriminatory prices. To ensure the provision of universal service, Member States shall impose on distribution system operators an obligation to connect customers to their network under terms, conditions and tariffs set in accordance with the procedure laid down in Article 59(7). This Directive does not prevent Member States from strengthening the market position of the household customers and small and medium-sized non-household customers by promoting the possibilities for the voluntary aggregation of representation for that class of customers.


Member States shall ensure that all household customers, and, where Member States consider it appropriate, small enterprises, enjoy universal service, namely the right to be supplied with electricity of a specified quality within their territory at competitive, easily and clearly comparable, transparent and non-discriminatory prices. To ensure the provision of universal service, Member States shall impose on distribution system operators an obligation to connect customers to their network under terms, conditions and tariffs set in accordance with the procedure laid down in Article 59(7) 
and with a maximum duration of six months between a request for connection and finalising the physical connection
. This Directive does not prevent Member States from strengthening the market position of the household customers and small and medium-sized non-household customers by promoting the possibilities for the voluntary aggregation of representation for that class of customers.





Reason

To achieve the climate targets including the 2030 targets the renewables build-up has to be accelerated. Barriers and delays have to be reduced. Tight deadlines are needed to enable the rapid build-up of renewables. Authorities and companies benefit from planning certainty.

Amendment 27

Article 28a






Text proposed by the European Commission


CoR amendment




Member States shall ensure that vulnerable customers are protected from electricity disconnections. This shall be provided as part of the concept of vulnerable customers pursuant to Article 28(1) of this Directive and without prejudice to the measures set out in Article 10(11).


Member States
, in cooperation with the Energy Poverty Advisory Hub,
 shall ensure that vulnerable 
and energy-poor
 customers are protected from electricity disconnections. This shall be provided as part of the concept of vulnerable customers pursuant to Article 28(1) of this Directive and without prejudice to the measures set out in Article 10(11).





Reason

The Energy Poverty Advisory Hub should help identify vulnerable and energy poor customers and advise on the implementation of protection measures.

Amendment 28

Article 59(1) point (z)






Text proposed by the European Commission


CoR amendment




The regulatory authority shall have the following duties: monitoring the removal of unjustified obstacles to and restrictions on the development of consumption of self-generated electricity and citizen energy communities, including related to the connection of flexible distributed energy generation within a reasonable time in accordance with Article 58(d).


The regulatory authority shall have the following duties: monitoring the removal of unjustified obstacles to and restrictions on the development of consumption of self-generated electricity and citizen energy communities, including related to the connection of flexible distributed energy generation within a reasonable time in accordance with Article 58(d) 
in close cooperation with local and regional authorities.







Reason

Local and regional authorities have relevant knowledge for removing barriers for consumption of self-generated electricity, energy communities and connection of flexible distributed energy generation.
II.   POLICY RECOMMENDATIONS

THE EUROPEAN COMMITTEE OF THE REGIONS (CoR)








1.


welcomes the European Commission’s proposal to reform the EU’s electricity market design to ensure stability of supply, improve consumer protection and speed up the expansion of renewable energy;












2.


highlights the need for an ambitious EU electricity market design in order to achieve the climate objectives, which will require an almost completely decarbonised electricity system by 2035; stresses the importance of consistency between the various packages of EU measures and highlights the need to enable robust investment in renewable energy generation and local and regional capacity in order to achieve the EU’s climate, security of supply and competitiveness objectives.












3.


stresses the importance of openness to new and different technologies as a basis of the reform, with an appropriate and suitable legal framework that allows the deployment of affordable and sustainable energy technologies, including energy storage, limiting the dependence on fuels sourced from third countries;












4.


underlines the proposal’s potential to decarbonise, decentralise and democratise the energy transition by means of a strong local and regional dimension; this will contribute to energy security and local value creation, produce economic benefits, and provide great opportunities for development, particularly for less developed regions;












5.


in order to achieve the renewable energy target of at least 45 % of the overall energy mix by 2030 (4), calls for any gaps to be addressed using the EU renewable energy financing mechanism;





Governance and democratisation of electricity markets









6.


stresses that the energy transition requires flexible, decentralised solutions such as promoting self-consumption, energy communities, decentralised storage facilities and simple feed-in options; calls for energy communities to be promoted, for procedures to be simplified, and for the public, small and medium-sized enterprises and local and regional authorities (LRAs) to be given the opportunity to be involved in and invest in local generation facilities. In many Member States, locally and regionally owned energy generation and distribution make a significant contribution to the energy supply, an important fact to build on;












7.


recalls that changes to the current EU electricity legal framework require closer coordination between national actors. The amendments proposed set out a common approach and a balance between obligations and flexibility left to the Member States on how to ensure a lower cost of renewable electricity and the deployment of renewable energy to achieve climate objectives that can only be tackled by action at EU level. To accelerate the energy transition, EU action is needed as proposed by the Commission.












8.


stresses that electricity supply must be guaranteed at all times for people in urban and rural areas, and also in island, mountainous and other remote regions, and in the outermost regions, and that place-based solutions are therefore necessary;












9.


calls for local and regional authorities to be more heavily involved in the energy transition, and to this end proposes the creation of one-stop shops for the public at local level; recognising the importance of local and regional authorities, it is crucial to involve them actively in the design and implementation of the electricity market regulations. Their expertise and local knowledge can contribute to creating enabling conditions for the integration of renewable energy sources, demand response mechanisms, and innovative grid solutions; The creation of regional energy platforms or working groups, where local and regional authorities, energy companies, and relevant stakeholders can collectively design and adapt electricity market frameworks to local needs is a good way to collect local expertise and knowledge;





Cheap and clean electricity for all









10.


welcomes the improvement in consumer protection brought about by the stricter rules on disconnections and the new principle of ‘suppliers of last resort’; calls for a robust social package, as mentioned in the resolution (5), and for Member States to get involved in the EU’s Energy Poverty Advisory Hub (6);












11.


calls for incentives to be put in place for savings that benefit the system, for self-consumption and for electricity feed-in; Member States should by default permit and promote the installations up to 1 kW in and on buildings;












12.


reiterates the call for a cheap (7), flexible, independent, decentralised, clean and sustainable energy system in which renewable energies guarantee security of supply, supported by flexible hydrogen power plants, energy storage and greater demand flexibility;












13.


welcomes the introduction of State guarantees for long-term power purchase agreements (PPAs) and notes that they should be open to all consumers;












14.


recognises that mandatory two-way contracts for difference (CfDs) are needed in order to skim off excess revenues in future price crises and to use them for specific purposes;












15.


calls for location criteria to be used in CfDs and flexibility mechanisms, in order to ensure optimal integration of renewable energy and, in particular, to enable less developed regions to reap the benefits of cheap renewable energy;





Strengthening the local and regional economy









16.


stresses the need to develop new business models with local economic cycles, for the future of the energy market; in particular, consumers should be encouraged to transition into active consumers and prosumers;












17.


regrets that the European Commission’s proposal fully upholds the merit order principle for wholesale market pricing; calls on the European Commission to consider a reform and to commission a study, as otherwise there is a risk that the development of renewable energy will not have a positive impact on prices for end customers to the extent desired, even in the long term;












18.


considers that time-of-use network tariffs should be used; these could be reduced if the feed-in and feed-out locations are located in the same or neighbouring local or regional administrative units;












19.


urges the Commission to press ahead with the integration of markets across borders, as border regions are hubs between Member States and with other nation states; energy communities and energy sharing should also be possible across borders;












20.


is convinced that digitalisation technologies can lead to a genuine transformation in the energy supply chain; calls for the faster deployment of smart meters in order to obtain real-time data on consumption and local generation;












21.


points out that the outermost regions have isolated electricity systems which cannot be connected to the European continental grid. This means that tailored measures and investments are needed to achieve the market and energy transition objectives through the development of renewable energy and alternative low-emission and storage technologies;












22.


stresses, finally, that this reform is just one of many building blocks in the success of the energy transition; is keen to see a more in-depth reform of the energy market in the European Commission’s new term, and also sees great potential in further strengthening LRAs in order to achieve a people-centred renewable energy system.






Brussels, 5 July 2023.


The President of the European Committee of the Regions

Vasco ALVES CORDEIRO
            





(1)  
            OJ L 158, 14.6.2019, p. 54.

(2)  Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources (OJ L 328, 21.12.2018, p. 82).

(3)  Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market for electricity and amending Directive 2012/27/EU (OJ L 158, 14.6.2019, p. 125).

(4)  Renewable Energy Directive (EU) 2018/2001.

(5)  Resolution of the European Committee of the Regions — The outcome and follow up of the Conference on the Future of Europe (OJ C 375, 30.9.2022, p. 9).

(6)  Energy Poverty Advisory Hub: https://energy-poverty.ec.europa.eu/index_en.

(7)  World Nuclear Industry Status Report 2022 via Lazard, Figure 52: The Declining Costs of Renewables vs. Traditional Power Sources, https://www.worldnuclearreport.org/IMG/pdf/wnisr2022-figure52_lazard_lcoe_2021.pdf.


ELI: http://data.europa.eu/eli/C/2023/253/oj
ISSN 1977-091X (electronic edition)