Electricity Market Design: An Integrated System Perspective is Needed to Fully Harness Flexibility

14 November 2023

EUGINE has been joined by five other major associations representing multiple energy carriers and integrated energy solutions in a call for taking an integrated system perspective in the electricity market design review.

The associations underline that the flexibility that can be provided via an integrated energy system approach that adequately considers the benefits of a decarbonised gas system and of existing and less carbon-intensive solutions is the quickest path to an affordable and climate-neutral power system.

An integrated approach to energy systems will allow more affordable energy prices for consumers by delivering the lowest-cost solutions at all stages of electricity production, transmission, distribution, and end-use. The benefits will also stem from system optimizations and efficiencies sector integration generates. With this in mind, and to harness the full flexibility potential in the electricity market design review under negotiation, we recommend:

  • Setting technology neutral flexibility objectives: improve the wording in Article 19d to set general flexibility objectives covering all relevant timeframes (at least daily, weekly, seasonal). This should also include locational criteria to address congestions and a more granular approach that could help optimize the response to flexibility needs.
  • Allowing all technologies to participate in support schemes: improve the wording in Article 19e and 19f to make sure generation is not excluded from these schemes.
  • Considering sector coupling in flexibility needs assessments: support the Parliament proposal in Recital 22a and Article 19c.1.
  • Supporting the uptake of on-site renewables and high efficiency cogeneration: support the Parliament proposal in Recital 11, oppose Article 7a.2(g) and Article 19f(c) (excluding behind-the-meter generation).
  • Assessing the implications of making capacity remuneration mechanisms a structural element of the electricity market, particularly with regard to ensuring investments in flexible capacity compatible with the Union’s climate targets: support the Parliament proposal to add a new Article 69.5.
  • Supporting the introduction of capacity mechanisms as a structural, instead of temporary and last-resort instrument: support the Parliament and Council proposals to modify Articles 21 and 22 of the Electricity Regulation.

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