SolarPower Europe Position Paper on Electricity Market Design
All routes to market for solar PV investments preserved. Maintaining of marginal pricing system. Market revenue caps no longer prolonged.
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SolarPower Europe strongly supports the proposal for a revision of the electricity market design framework put forward by the European Commission on the 14th March 2023 for three reasons:
Preserve all routes to market for solar
The proposal avoids mandating Contracts for Difference, or any other single financing mechanism, on all new renewable investments or on existing assets. This would have prohibited subsidy-free new renewable contracts, or threatened retroactive changes on existing private contracts.
Maintain marginal pricing system
The marginal pricing system is a straightforward signal of excess or scarcity of electricity in the system, and efficiently reveals the system’s needs. Not only it is a common feature of markets, it also corresponds to the physical and technical needs of the power system. It is therefore an essential price signal for innovative technologies that can support grid needs, such as solar and battery storage or smart solar plant controller.
Market revenue caps are not prolonged.
Market revenue caps have resulted in a patchwork of measures at national level. In some markets this even impacts disregard long-term supply contracts such as renewable Power Purchase Agreements thus creating significant distortions among PPA markets.
These provisions are important. However, we also recommend:
The EU should further protect PPAs, by enshrining protection against retroactive regulatory changes into law. It should further put an end to market revenue caps. Uncertainty regarding emergency measures and uncoordinated market interventions harm investments in renewables.
The new framework for energy sharing, which will strengthen the role of consumers in the energy system, requires cost-reflective grid tariffs and a specification of its scope. Large companies must be included and installations owned by third parties should be limited to 10 MWp capacity per installation.
The EU should further support the deployment of energy system flexibility solutions. It should conduct flexibility assessments for a longer period than 5 years and in line with the energy mix projections. Demand response and storage targets should be considered in grid planning. Furthermore, the collaboration between grid operators and the renewables industries should be strengthened in the grid and project development phases.
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