Market design: Accelerating investments in renewables in times of reform

When: Tuesday, 25 April 2023, 11:45 - 12:30
Where: Electrification stage

Session description

The panelists will discuss how the current investment environment of high inflation and the energy crisis, which has resulted in several interventions in the electricity markets, affects their investment decisions in renewable energy. In the Commission's proposal for market reform, they focus in particular on making changes to the long-term markets as an attempt to accelerate investment in renewable energy. What is the trade-off between market reforms that focus on creating a better framework for investments in renewable energy and having a clear, transparent and manageable investment framework.

In the last few years, European energy markets have experienced unprecedented challenges caused by geopolitical tensions between the EU and Russia, which have led to gas shortages, which, together with pandemic demand, are increasing, and unfavorable conditions for renewable energy production have resulted in electricity price increases. The European Commission has responded to the fallout from the energy crisis by announcing interventions in EU electricity markets, leading to a proposed market reform currently in the EU legislative process.

In the proposed market reform, the Commission recognizes the importance of short-term markets in creating price signals for investments in renewable energy. In order to ensure access to sufficient liquidity for investments, the Commission proposes initiatives to increase liquidity on futures markets and create better opportunities for hedging by removing current access barriers on both power PPAs and future markets.

However, the announcement of the market reform and other interventions in the markets have led to an increased uncertainty, which hampers investments and can end up slowing down the green transition. It is therefore important that in times of crisis, uncertainty and reforms that the EU Commission focuses on creating a clear, foreseeable and transparent investment framework that delivers correct long term investment signals.