European Parliament backs move towards redesigning the EU’s energy market

The European Parliament’s industry and energy committee (ITRE) voted this week to approve the legislative proposals made by the European Commission on the design of Europe’s electricity market.

MEPs voted in favour of stricter rules for capacity mechanisms – measures taken by EU countries to ensure medium to long-term supply of electricity.

However, the Parliament also voted for measures that could hinder trade in electricity across borders.

Part of the vote focused on legislation around the regionalisation of Europe’s electricity markets. The Parliament voted to support the creation of Regional Cooperation Centres (RCCs) but also chose to limit the extent of their powers.

These centres will help ensure more rapid and cost-effective renewable energy into the grid. They will complement the role of Transmission System Operators (TSO) by optimising the operation of Europe’s electricity grid, helping to share resources and flexibility across markets.

ClientEarth Law and Policy advisor Julie Finkler said: “We welcome the decision of the committee to support the creation of RCCs. These centres represent a fundamental step towards the creation of a pan-European, fully integrated electricity market.

“The European Parliament’s decision clearly challenges EU governments that have opted for less ambitious proposals.”

In a contradictory move however, the European Parliament also decided to limit the decision-making powers of RCCs in some cases. The ITRE committee also adopted amendments that potentially limits RCCs from carrying out their tasks independently from TSOs.

This could result in decisions and recommendations that might allow uncoordinated TSO actions and lead to inefficient operation of the regional electricity networks at a high cost to consumers.

The committee also adopted a minimum threshold for cross-border capacity on electricity interconnectors, which grants TSOs the right to limit cross-border trade.

Yet, the minimum threshold does not seem to be linked to any objective justification and seems at odds with the fundamental principles of free movement of goods and effective competition. It may also impede the cost efficient integration of renewables, thus the transition to clean energy.

Finkler added: “The committee’s vote risks slowing down the integration of the internal energy market. Adopting the threshold could have the potential to limit the benefits for consumers and the environment.”

The European Parliament, European Commission and Council of the EU will now enter into trilogue negotiations to finalise these new laws over the coming months.

The vote on Wednesday was on the last set of legislative proposals that form part of the Clean Energy for All Europeans package: the revision of the Directive and Regulation on the Internal Market for Electricity, the Regulation defining the role of ACER (the Agency for the Cooperation of Energy Regulators), and the one ensuring Member States’ risk-preparedness in the electricity sector.