In 2025, the European Commission is expected to present an EU Plan for Affordable Energy to industries and households during the energy transition. In this context, Eurelectric has published a document with suggestions to ensure the competitiveness of the EU industry and affordable electricity. 83355

The association highlights the importance of massively deploying renewable and clean energy to replace fossil fuel imports.

The International Energy Agency (IEA) estimates that EU electricity consumers saved €100 billion during the period 2021-2023 thanks to 150 GW of new solar and wind capacity, displacing 230 TWh of fossil fuel generation. This led to price reductions across all European markets, resulting in more competitive prices for industries. Increasing clean energy deployment requires a swift implementation of the Renewable Energy Directive, including faster permitting and rapid grid connections.

Another key point highlighted was boosting electrification to reduce system costs by distributing investment across more consumers. According to Eurelectric, increasing energy demand requires:

-Fixing the Energy Taxation Directive, which taxes electricity 1.4 times more than gas.

-De-risking investments in clean electrification projects through bank guarantees, streamlined lending processes, and solid public financing options to increase utilities' debt capacity.

-Expanding and digitizing power infrastructure to ensure timely connections.

-Developing long-term contracts such as PPAs and CfDs. The European Investment Bank could the development of PPAs by introducing guarantees for counterparty risks.

-Mainstreaming flexibility by mobilizing all supply-side technologies, increasing storage, and activating demand-side response.

-As Draghi acknowledged, flexible industrial consumers can significantly help reduce overall system costs, renewable integration, and enhance grid flexibility, while reducing energy costs for industry.

-Implementing electricity market design reform.

Euroelectric's objections 3g3x6s

The association opposes inframarginal price caps. This measure disincentivizes consumers from entering long-term hedging contracts, as they would assume they are already covered by the regulator. Invoking a semi-permanent state of crisis with frequent market interventions will deter investors at a time when their capital is crucially needed.

It also says no to the mandatory extension of long-term contracts with a clawback option for renewable and nuclear assets. This measure is counterproductive for assets that operate on market scarcity signals, such as hydropower. Hydropower plants generate electricity when supply is scarce, providing flexibility to the system. Mandating a long-term arrangement would turn hydropower into a baseload resource, reducing its value to the system.

Another major concern raised in the document is treating utilities as investment firms by removing the ancillary activity exemption (AAE) in the Markets in Financial Instruments Directive II (MiFID). This would reduce energy companies' hedging capacity as they would need to comply with higher collateral requirements to trade energy as if they were banks. This would result in fewer PPAs being offered in the markets and make risk management more difficult and costly, ultimately raising energy costs for consumers.

Eurelectric's Secretary General, Kristian Ruby, stated, "Extending this legislation to utilities will increase bureaucracy, make the market less liquid, and tie up billions of euros that could otherwise be invested in the transition. In other words, lawmakers will achieve exactly the opposite of what the clean industrial deal is meant to accomplish."

The association is also against requiring suppliers to offer a share of their publicly subsidized production through PPAs at 'production cost plus markup' to specific industries. This is concerning as it creates a sort of regulated supply tariff for certain customer segments, resulting in a rollback of the liberalization process and leading to regulatory instability.

Another issue raised in the document is tariff exemptions or preferential treatment for specific consumers. Exempting certain consumer categories from paying some costs, such as network charges, taxes, or levies, inevitably increases costs for other consumers, discouraging electrification. A preferable option to industry should be direct compensation through general taxation.