Energy Traders Europe calls on EU to prioritize energy market integration

Energy Traders Europe called on the European Commission to prioritize energy market integration for a competitive Europe. The focus should be on market integration, which is the quickest and simplest way to unlock value for customers, according to the organization.

“The Action Plan for Affordable Energy accurately states ‘There is a clear and urgent need to strengthen our Energy Union’, and we believe that the key to affordable energy prices is not more regulation, but the simplification and harmonization of energy markets across Europe,” Energy Traders Europe pointed out.

The European Commission presented the action plan ten days ago. It is one of the pillars of its Clean Industrial Deal initiative.

In its reaction to the overall policy package and Action Plan for Affordable Energy, the organization argued that a well-functioning, integrated energy market is Europe’s greatest asset in navigating geopolitical uncertainty, driving the energy transition, and ensuring competitiveness.

The electricity market design reform should be a priority

Energy Traders Europe said the plan is a good starting point for further energy market integration. “But, we need a new urgency in that process and, as the foundations of the global order shift around us, we need to be willing to do things differently,” it stressed.

The electricity market design reform was approved last year, Energy Traders Europe noted and urged for its implementation as a priority for electricity markets. It asked the commission to be more proactive with the matter.

There are opportunities to improve and evolve the way forward markets operate, potential benefits from aligning the design of contracts for difference (CfDs) and power purchase agreements (PPAs), and a real need to ensure cross-border capacity is made available.

“And there is an opportunity to enhance supply security and competitiveness by expanding the Energy Union beyond the borders of the EU. Doing this will require important design changes to the Carbon Border Adjustment Mechanism (CBAM) to reflect the specifics of electricity,” the reaction reads.

The organization criticized reviews of EU legislation

The organization criticized the recent launch of a review of the European gas market, including the lack of transparency over its terms. Removing regulatory barriers to gas trading and implementing the Methane Emissions Regulation to enable European gas importers to resume long-term contract negotiations would be more likely to unlock benefits for customers, Energy Traders Europe said.

The action plan references the consultation foreseen in the MiFID legislation (Markets in Financial Instruments Directive) to assess the case for changes to the supervision and surveillance frameworks that apply to energy and financial markets.

While the commitment to an open and transparent process is welcome, the action plan seems to hint at unease about market functioning and hints at a desire to increase the level of regulation, according to the document.

It would be a mistake that would impact the liquidity of traded markets and tie up capital which could be better used to accelerate the energy transition, the organization underscored.