European Energy…

I’m here in Budapest attending the ETCSEE Conference. It seems well attended and the morning sessions were interesting. I’m writing this during a break.

However, the initial presentation by the Head of Wholesale Markets, European Commission, Mr. Florian Ermacora, was an interesting talk outlining the new electricity design for Europe – an update, he basically enunciated the two overarching concerns of the European Commission in its approach; namely, security of supply and decarbonization of the market. An integrated European market remains the goal of course.

He pointed out that renewables play a large role in the power market here but insists that state aid for renewables will not work and that a level playing field is required going forward. He also pointed to state aid for conventional generation is often used by states as a security of supply measure. He looks for more intra-day, day-ahead and balancing markets for renewables with shorter-term pricing signals and stated that the European Parliament remains sympathetic to priority dispatch for renewables.

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The commission is unhappy with regulated prices where in some countries, it faces stiff resistance and regulated retail prices are still popular and said that if retail customers cannot choose a supplier in a competitive market then the market will not ultimately work. In terms of consumers, he also discussed the role of the consumer as prosumers requiring more aggregators in the market and more decentralized supply in the future. In this regard, the ability to shift demand will also be important.

It was in one of his final point that I had to draw a sharp intake of breath. The EU proposes not to allow state aid for CO2 heavy generation such as coal. OK. However, it worries me greatly to hear CO2 referred to as a pollutant – which is the term he used. It is a very dangerous thing in my opinion to call this planet’s naturally occurring, life sustaining gas, a pollutant! I understand his intent, but CO2 is NOT a pollutant as I would understand that term. It is plant food and without it…. well, there would be no life on this planet at all. However, I suppose I digress but how things change….

His last two points were to talk about the under utilization of connectors and the need for capacity transparency going forward and that finally, the right governance structure was needed with regulatory bodies in each country and at the EU level.

 

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