Steam rises from cooling towers of the Electricite de France nuclear power station in Cruas, France. Filoe photo: ERIC GAILLARD/REUTERS
Power prices in Europe are set by the running cost of the plant that supplies the final chunk of power needed to meet overall demand. Often, that is a gas plant, so gas price spikes can send electricity prices soaring.Spain, France and Greece are among those seeking a deep reform. Similarly, France suggests requiring energy suppliers to sign long-term, fixed-price contracts with power generators — either through a CFD, or a private power purchase agreement between the parties.
They say Europe’s existing power market is functioning well, and has fostered years of lower power prices, supported renewable energy and helped avoid energy shortages. The commission said this could be done by setting EU-wide rules for CFDs and letting countries voluntarily use them, or require new state-funded power plants to sign CFDs. The consultation mooted the idea of forcing existing power plants to sign CFDs, but said this could deter much-needed investments in renewable energy.
Energy companies including Engie, Orsted and Iberdrola have said making CFDs mandatory or imposing them retroactively on existing power plants could deter investment and trigger litigation from energy companies.EU countries’ energy ministers discuss the reforms on Monday, before formal negotiations begin.
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This is why EU is split over energy market fixes as ministers meetCountries gather over upcoming power industry reforms that Brussels is set to propose next month
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