Electricity

EU concludes political talks on clean energy package, to cut subsidies for most polluting coal power plants as early as 2025

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Published

December 19, 2018

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Published:

December 19, 2018

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Members of the European Parliament (MEPs) and EU member states have reached a provisional agreement on a recast internal electricity market regulation and directive, concluding the political negotiations on the Clean Energy for All Europeans package. The provisional agreement envisages scrapping subsidies as capacity mechanisms for power plants emitting more than 550 gr of CO2 of fossil-fuel origin per kWh of electricity in 2025 – 10 years earlier than expected.

The two files, which still have to be formally endorsed by the Council and the European Parliament (EP), set out the future functioning of the EU’s electricity market and are cornerstones of the clean energy package, according to press releases from EU institutions.

An overhaul of EU electricity market rules was informally agreed to tackle barriers to cross-border trade of electricity and create a real European electricity market where 70% of all electricity can cross EU borders freely. This will make it easier to integrate renewable energy in the electricity grid and hence support efforts to reach the EU’s binding goal of 32% renewables by 2030.

Priority dispatch to continue to apply for existing, fair rules on curtailment for new renewables

Negotiators from the European Parliament and the Council agreed that priority dispatch for existing renewables will continue to apply, according to a press release from WindEurope. For new renewables, in its place come fair and transparent rules on curtailment, including giving compensation for lost revenues in countries where re-dispatch is not market-based.

Transmission System Operators (TSOs) will also have to report on all re-dispatch actions. They will also have to follow recommendations from energy regulators on how to make re-dispatching more efficient and avoid the curtailment of renewables. This will help give transparency on any ‘must-run obligation’ agreements with conventional power plants that are crowding out renewables from the grid, said the Brussels-based association promoting wind power in Europe.

Move to cut subsidies for most polluting coal power plants

The stricter limits for member states willing to subsidize power stations as a capacity mechanism are designed to prevent the most polluting coal power plants in Europe from receiving state aid. From July 1, 2025, power stations emitting more than 550 gr of CO2 per kWh of electricity and 350 kg CO2 on average per year per installed kW will not receive subsidies from the state to remain on stand-by in case of demand peak of electricity. The measures will apply to all new capacity mechanisms from date of entry into force of the regulation and to existing ones from 2025.

The new provisions will help the EU reach its climate targets and at the same time protect investment security thanks to a grandfather clause for capacity contracts that were concluded before December 31, 2019.

Consumers to benefit substantially

Consumers will benefit substantially from the new rules, which include:

  • Switching – electricity providers must offer consumers the option to switch provider (with no fees) within a maximum period of three weeks (and 24 hours by 2026);
  • Smart meters – consumers will have the right to get smart meters to control their consumption, unless analysis in a given member state shows that the cost outweighs the benefits;
  • Price comparison: consumers will have access free-of-charge to an online price comparison tool;
  • Dynamic price contract: consumers will also be able to opt for a dynamic electricity price contract from energy companies with more than 200,000 clients.
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