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Energy policy ‘re-nationalisation’ risks 2014 EU single electricity market deadline

25 Sep 2012 11:55:45 | edem

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Capacity markets across the EU pose a danger to the development of a single electricity market because they risk the "re-nationalisation" of energy policy, the European Commission's deputy director general for energy Fabrizio Barbaso told ICIS at a conference in Milan, Italy, on Monday.

"The [capacity] mechanism has evolved differently according to each country, and we want to avoid a re-nationalisation of energy policies that could happen via the implementation of capacity markets, which could put markets at conflict with one another, or could advantage some operators over others," he said.

Barbaso also revealed that the Commission is preparing a document which will spell out the risks to the implementation of the single European electricity market by the 2014 deadline.

And despite doubt in the market that the deadline can be met - the target was labelled "unrealistic" by the chief executives of a number of European energy firms in June (see EDEM 14 June 2012) - Barbaso insisted it could be met.

"We think 2014 is still a feasible date, but a lot will depend on the implementation of working rules for the market, for which the cooperation of [transmission system operators], regulators and the Commission is required," he said.

The EU is aiming to see member states' Day-ahead markets harmonised by the 2014 deadline, but a number of issues are still to be tackled, including congestion problems, Barbaso said.

"[The document] will identify the areas that require the largest amount of work to be done in order to achieve the target," the official said, adding that the report would be finalised "in the next few weeks".

The document will also highlight the capacity market issue.

Capacity markets have become necessary across the EU as the drive to meet 2020 renewable power generation targets gathers pace.

Because some renewable sources, most notably wind and solar power, are intermittent by their nature, back-up capacity must be ready to generate power at very short notice.

Capacity markets will define how and through what means generators are remunerated for ensuring the provision of adequate back-up capacity.

But the design of the models has triggered debate across Europe. Earlier this month, Germany's environment minister warned against introducing a comprehensive capacity market on the grounds of rising renewables subsidy costs (see EDEM 16 August 2012). SM

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