March 30, 2023

Seven EU countries against electricity market reform – Energy

Germany, Denmark, the Netherlands, Luxembourg, Finland, Lithuania and Slovenia have sent a letter to the European Commission in which they support a lighter reform of the electricity market, contrary to what Spain and the France.

Germany, Denmark, the Netherlands, Luxembourg, Finland, Lithuania and Slovenia sent a joint letter to the European Commission in which they favor a lighter reform of the electricity market, at the expense of more ambitious amendments submitted by Spanish and French governments, reports El Economista.

The seven northern European countries, led by Denmark, explain in the document sent on Monday that the current design of the European energy market has allowed many years of low electricity prices, as well as the expansion of renewables. At the same time, they say, it has ensured that enough energy has been produced to meet demand and prevent shortages of this raw material.

“We must resist the temptation to kill the ‘goose that lays the golden eggs’ that has been our single electricity market for the past decade,” argued Lars Aagaard, Denmark’s energy minister. These EU member states admit, however, that there is room for improvement, particularly after energy prices rise in 2022. However, they note that any change must ensure that the market continues to work and encourage strong investment in renewables energy.

“Any reform that goes beyond targeted adjustments to the current framework must be based on an in-depth impact analysis and must not be approved in a time of crisis,” states the document sent to the Commission, see from Reuters.

The seven countries, which include the EU’s biggest economy, Germany, support an idea launched by the Commission to make it easier for consumers to choose between the free and regulated market. Faced with a proposal, also by the Commission, to extend an extraordinary temporary tax to companies that are not natural gas producers, these member states say it “could jeopardize investor confidence in the necessary investments”. As justification, these seven members cite EU estimates that billions of euros of investment in renewable energy are needed to help the 27 stop importing fuel from Russia.

The letter comes at a time when other countries such as Spain and France are seeking more radical reforms. Pedro S├ínchez’s executive even proposed a change to long-term and fixed-price contracts in order to limit peaks in energy prices.

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