EU countries not implementing power market reforms

The European Commission is taking infringement cases against 21 EU governments, for failing to adopt reforms to the electricity market as agreed in 2019, which are necessary to allow the grid to accommodate new renewable and electrical devices.

The defining EU energy policy of the 2010s was the Clean Energy Package which concluded in 2019. A reform of the market rules for power would “allow electricity to move freely to where it is most needed,” the EU’s executive said at the time while improving consumer welfare.

The rules aimed to strengthen consumer protection and boost the flexibility of power flows across Europe, and could have helped mitigate the impact of the 2022 energy crisis. There was just one problem: the rules were largely ignored by EU countries. 

According to a database of Commission infringement cases, 21 EU Member States are being pursued by the Commission for not properly transposing the 2019 electricity market rules into national law– despite the deadline expiring on 31 December 2020. 

Austria, one of the infringing countries, must update its law to make it easier for companies to buy their power directly from producers, known as the power-purchase agreement (PPA) –  allowing direct cable lines from wind turbines to factories.

“This modernisation of the electricity market’s operating system is urgent and necessary,” Christoph Dolna-Gruber, an expert with the Austrian energy agency, told Euractiv.

Hold-ups “will result in unnecessary economic costs and a delay in the energy transition,” he added.

In his home country, any short-term translation of the rules into national law is looking increasingly unlikely with elections looming – while usage of solar panels and electric vehicles is  “growing fast,” explained Dolna-Gruber.

This could pose a challenge. Flexible devices and growing demand for electricity are challenges not adequately anticipated by the original framework. 

To accompany the transformation, “rule changes are needed,” says the expert, which means “greater integration of industry, commerce and households,” which are turning from pure power consumers to suppliers and “flexibility providers.” 

Yet very few countries have properly adapted the rules, more than three years after the deadline expired. Procedures to sue Lithuania, Slovenia, Ireland, Malta and Cyprus were initiated by the Commission, but dropped once the countries showed they were in compliance.

In the meantime, the EU adopted another power market reform and is considering a third in the upcoming term.

There is the possibility that national lawmakers may find themselves having to transpose three separate power market reforms all at once.

Bad boy Romania

One country that stands out from the rest is Romania. The Commission believes that the country is ‘violating’ the 2019 rules, unlike the rest of Europe, who are only charged with a delayed or partial implementation. 

Faced with the 2022 energy crisis, Bucharest centralised its power market, put in place high taxation rates on trading electricity, and capped retail prices. 

These measures will be in place until 2025. The Commission has urged the country to stop restricting electricity exports.

With EU countries hoping to boost the connectivity of their electricity grids to improve efficiency, much remains to be done.

[Edited by Donagh Cagney/Rajnish Singh]

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