Addressing the energy crisis

in the short and long term

13.10.22
CESEC Electricity and Renewable Energy Plenary and Working Group

Mathilde Lallemand – DG ENER Unit C3

The reality of the crisis

Electricity Prices behave

markets as expected
don’t work VS. given the current context

VS. Volatility
Volatility has
has to be
to be avoided
managed
 The actions taken to tackle the energy crisis

RePowerEU Plan

Non-paper: Security Short-Term Energy

REPowerEU: Joint of supply and Market Interventions
European Action for affordable energy and Long Term
Energy Prices prices:
more affordable, Improvements to the
Toolbox Options for
secure and Electricity Market
sustainable energy immediate measures Design – a course
and preparing for for action
next winter

13 Oct 2021 8 March 2022 23 March 2022 29 April 2022 18 May 2022

Council Regulation
Council Regulation on an emergency
EU regulation on Non-paper: Proposal for
on coordinated intervention to
gas storage options for gas improvements of the
demand-reduction address high energy
price cap market design
measures for gas prices

24 June 2022 4 August 2022 28 September 2022 30 September 2022

 Emergency intervention to address high energy prices
Why a Regulation under Article 122?
"...the Council, on a proposal from the Commission, may decide, in a spirit of solidarity between
Member States, upon the measures appropriate to the economic situation, in particular if severe
difficulties arise in the supply of certain products, notably in the area of energy."
Current challenges on the gas & electricity markets constitute a difficulty in the supply of an energy product.

What is proposed?

1 Reduce demand: at peak price times (full use of DR potential) & overall (initiatives to include all consumers)

Surplus revenues from inframarginal generators

2 Redistribute
Surplus profits from companies with oil, coal, gas & refinery activities

3 To benefit consumers: more clarity on regulated prices for households & SMEs, while preserving
the incentive to reduce demand.
Demand reduction measures
Capping revenues of electricity producers
How does the remuneration limit work?
Solidarity contribution from fossil fuel businesses
How can revenues from the regulation be used?
 What’s next?

RePowerEU Plan

Non-paper: Security Short-Term Energy

REPowerEU: Joint of supply and Market Interventions
European Action for affordable energy and Long Term
Energy Prices prices:
more affordable, Improvements to the
Toolbox Options for
secure and Electricity Market
sustainable energy immediate measures Design – a course
and preparing for for action
next winter

13 Oct 2021 8 March 2022 23 March 2022 29 April 2022 18 May 2022

Council Regulation
Council Regulation on an emergency
EU regulation on Non-paper: Proposal for
on coordinated intervention to
gas storage options for gas improvements of the
demand-reduction address high energy
price cap market design
measures for gas prices

24 June 2022 4 August 2022 28 September 2022 30 September 2022

Reform of the electricity market design
 First areas in the 18 May 2022 Communication

 Electricity as a basic right for vulnerable consumers

 Protecting consumers against high prices and excessive volatility

 Ensuring investments in firm and low carbon capacity

 Enhancing demand response and flexibility to reduce peak prices

 Electricity and gas infrastructure

 Reducing costs and windfall profits through locational pricing

 Market surveillance and transparency

 Thank you

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REPowerEU: from goals to actions

Independence from Russian fossil fuels by 2027

 Increase imports of liquefied natural gas (LNG) by 50 bcm
 Increase pipeline gas imports by 10 bcm
 Increase biomethane production by 3.5 bcm
 EU-wide energy saving to cut gas demand by 14 bcm
 Rooftop solar to reduce gas demand by 2.5 bcm
 Heat pumps to reduce gas demand by 1.5 bcm
 Reduce gas demand in the power sector by 20 bcm by
deployment of wind and solar

Increase the target of Increase the target of

renewable energy from energy savings from 9%
40% to 45% by 2030 to 13% by 2030
Cap – what technologies are covered?
Optional de
Excluded Included minimis:
≥ 20 KV
• High marginal costs • Wind
generation: gas, coal • Solar
• Flexible generation: • Geothermal
storage, demand • Hydro without reservoir
response
• Biomass
• Demonstration projects
• Waste
• Producers subject to
• Nuclear
State measures such
as FITs, 2-way CfDs • Lignite
• Crude oil and other oil
products