Electricity Market Design - Parliament steps up to the plate for energy communities. Yet risks of corporate capture in energy sharing persist
Brussels, 19 July 2023 - Today, the European Parliament Committee on Industry, Research and Energy (ITRE) agreed on a common position for amendments to the European Commission’s legislative proposal on the revision of the EU’s Electricity Market Design (EMD). These amendments significantly enhance the proposed ambition by the Commission, which opened up energy sharing to commercial energy companies without adequate safeguards to ensure a level playing field for energy communities to realize projects at the local level. The amendments also make an effort to improve transparency by grid operators when projects are trying to connect to the grid, an ever more pressing issue as infrastructure becomes more strained.
Specifically, the Parliament’s amendments emphasize the principle of ensuring a level playing field for community-owned distributed renewables production in the EMD. Further, distribution system operators would be required to take into account the specificities of energy communities in their grid connection procedure to make sure they can obtain grid access on an equal footing with other market participants. The amendments also make it explicit that energy communities may be targeted by instruments to support the uptake of power purchase agreements (PPAs), and that two-way contracts for difference (CfDs) should not apply to community projects under 6 MW. The amendments also strengthen transparency by grid operators, introducing a requirement to publish monthly information on available grid capacity for new connections, and to respond to connection requests within three months.
Unfortunately, despite the Parliament’s proposed amendments, there remains a significant risk of corporate capture of energy sharing. Third party ownership is still allowed for projects up to 6 MW, and the Parliament failed to include strong consumer protections that would guarantee that active customers get to decide on the price of shared energy instead of the third party that owns the installation. This will expose less savvy consumers to bad practices by energy companies that want to maximise profits. The right to switch a third party service provider has also been omitted, which will expose consumers to lock-in by commercially-driven energy sharing initiatives.
The Parliament’s position also opens up energy sharing to large enterprises and largely keeps the Commission’s proposal of allowing energy sharing at the bidding zone level. Taken together, this implies that large industrial consumers might share self-production over long distances, potentially leading to congestion and discrimination against smaller household consumers by shrinking the grid’s capacity to provide them with connections. Furthermore, the position still allows support schemes for nuclear alongside renewables, hindering efforts to transition towards a decentralised energy system based on renewables and flexibility.
Dirk Vansintjan, President of REScoop.eu, the European Federation of Citizen Energy Cooperatives, had to say: “The Parliament has spoken up for local ownership of renewables by ensuring that energy communities can access the grid to share renewables production with each other to lower their member’s energy bills.” Continuing, Vansintjan says “However, the EMD still keeps the door open for large energy companies to undermine the advantages of energy sharing for citizens by limiting consumer choice and abusing their dominant market position.”
Now that the ITRE Committee has voted on its position, the rapporteur will request a mandate to start inter-institutional negotiations with Council. If this is granted, the file will only be announced in the Plenary of the Parliament in Sept. In the meantime, the Parliament will wait for the Council, which failed to agree on a General Approach on the EMD at the end of June. Once the Council concludes its General Approach, the Parliament and Council will enter into trilogue negotiations to streamline their two positions into a final text that will become EU legislation.
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