Digital Revolution: EU Talks Energy Market Design

Written by | Thursday, December 21st, 2017

EU energy ministers were trying to find a common ground on three key pieces of energy legislation in the run-up to fierce negotiations with the European Parliament expected to be held early in 2018. Member states agreed on a so-called “general approach” before the start of private talks with the European Commission and Parliament next year.Negotiations started on Monday (18 December) when ministers tried to agree on two electricity market design laws.

Estonia was hoping for a strong position given its EU Presidency. The Baltic country is a keen supporter of the digital revolution to the extent that it placeddigital policy at the core of its EU presidency program. “It’s the closest to our hearts. Really, really close,” said an Estonian Presidency source earlier this year.Outlining Estonia’s EU Presidency priorities,JüriRatas, the country’s Prime Minister,stressed that “we have a digital dimension to almost every aspect of our presidency program.”Therefore, it does not come as a surprise that the electricity market design proposalput forward by the European Commission is an area where Estonia is convinced that digitalization can make a big difference.

On the electricity market design regulation, there are a few key points on the table. First, there are new regulations to make sure that appropriate conditions for electricity trading within different timeframes are weighed in. This will lead to a higher share of renewables production in the energy systems. Second, there is a plan to establish “bidding zone” that is trading areas and the rules on capacity allocation are already specified. A benchmark level of maximum capacity has been set up and the countries below that level will have to implement remedial actions or configure the bidding zones.


The EU is also continuing installations for making electricity generation available through capacity mechanisms to handle peak demands. Harmonization will also take place to make sure that the internal market is functioning properly. An important piece is that new installations will be allowed to participate in capacity mechanisms after 2025 only if their emissions are below 550gr CO2/kWh or below 700 kg CO2 on average per year per installed kW.

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