Energy co-ops welcome European Parliament vote on electricity market design

But citizens’ energy federation REScoop warns that ‘risks of corporate capture in energy sharing persist’

Amendments to new laws on the EU electricity market, aimed at protecting consumers against volatile prices, have been welcomed by the energy co-op sector.

On Wednesday (19 July) MEPs on the EU Committee on Industry, Research and Energy (ITRE) agreed a common position to adopt a series of amendments to the Commission’s draft legislation. The reform was backed by 55 members of the MEPs on the ITRE, with 15 voting against and two abstaining.

“With this agreement, Parliament puts citizens at the centre of the design of the electricity market, prohibiting companies from cutting the power of vulnerable and at-risk consumers, promoting the right to share energy, reducing price spikes and promoting affordable prices for citizens and companies”, said lead MEP Nicolás González Casares (S&D, Spain).

“We turned CfDs into the reference system for encouraging the electricity sector to transition towards a renewable-based zero-emission system. A system that will improve make companies more competitive through clean electricity at competitive and stable prices.”

REScoop, the European federation of citizen energy co-operatives, welcomed the amendments, arguing they “significantly enhance the proposed ambition by the Commission”. The Commission’s original draft legislation had “opened up energy sharing to commercial energy companies without adequate safeguards to ensure a level playing field for energy communities to realise projects at the local level”, it added.

The federation views positively the ITRE’s “effort to improve transparency by grid operators when projects are trying to connect to the grid”. It is also in favour of MEPs’ amendments to emphasise the principle of ensuring a level playing field for community-owned distributed renewables production in the EMD.

Under the amendments, 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 position paper also specifies 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 6MW, something welcomed by REScoop.

The apex also notes that the amendments 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.

However, REScoop warned that “there remains a significant risk of corporate capture of energy sharing”.

In particular, it disapproved of allowing third party ownership for projects up to 6MW. REScoop believes the Parliament failed not 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

The federation argued this “will expose less savvy consumers to bad practices by energy companies that want to maximise profits.” REScoop would have also liked to see the right to switch a third party service provider stipulated in the text. The failure to do so will “expose consumers to lock-in by commercially-driven energy sharing initiatives,” said REScoop.

Another move criticised by the federation is opening up energy sharing to large enterprises and allowing energy sharing at the bidding zone level. REScoop warns that “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”. The federation also disapproved of allowing support schemes for nuclear alongside renewables, which, it says, will hinder efforts to transition towards a decentralised energy system based on renewables and flexibility.

REScoop president Dirk Vansintjan said: “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. 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.”

The Council of the European Union is yet to agree on a position on the EDM revision. Once it does the Parliament, the Council and the Commission will enter inter-institutional negotiations with the aim of approving a final text that will become EU legislation.