Commission proposes reform of the EU electricity market design to boost renewables, better protect consumers and enhance industrial competitiveness

The European Commission has proposed to reform the EU's electricity market design to accelerate a surge in renewables and the phase-out of gas, make consumer bills less dependent on volatile fossil fuel prices, better protect consumers from future price spikes and potential market manipulation, and make the EU's industry clean and more competitive.

The energy crisis spurred by Russia's invasion of Ukraine has underlined the need to quickly adapt the electricity market to better support the green transition and offer energy consumers, both households and businesses, widespread access to affordable renewable and non-fossil electricity. 

The proposed reform foresees revisions to several pieces of EU legislation – notably the Electricity Regulation, the Electricity Directive, and the REMIT Regulation. It introduces measures that incentivise longer term contracts with non-fossil power production and bring more clean flexible solutions into the system to compete with gas, such as demand response and storage. This will decrease the impact of fossil fuels on the consumer electricity bills, as well as ensure that the lower cost of renewables gets reflected in there. In addition, the proposed reform will boost open and fair competition in the European wholesale energy markets by enhancing market transparency and integrity.

Building a renewables-based energy system will not only be crucial to lower consumer bills, but also to ensure a sustainable and independent energy supply to the EU, in line with the European Green Deal  and the REPowerEU Plan. This reform, which is part of the Green Deal Industrial Plan, will also allow the European industry to have access to a renewable, non-fossil and affordable power supply which is a key enabler of decarbonisation and the green transition. To reach our energy and climate targets, the deployment of renewables will need to triple by the end of this decade.

EU Energy Commissioner Kadri Simson said:

The current electricity market design has delivered an efficient, well integrated market over many decades, but tight global supply and Russia’s manipulation of our energy markets has left many consumers facing massive increases in their energy bills. We are today proposing measures that will enhance the stability and predictability of energy costs across the EU. Driving investment in renewables will help us reach our Green Deal goals and make the EU the powerhouse of clean energy for the coming decades.

For More Information

Press release

Questions and Answers

Factsheet

Proposal for an amending Regulation to improve the Union's electricity market design

Proposal for an amending Regulation to improve the Union's protection against market manipulation in the wholesale energy market

Staff Working Document on the electricity market design reform

Recommendation and Staff Working Document on storage

Electricity market design