The European Parliament’s energy committee on Wednesday agreed to drop a proposal to cap power plants’ windfall revenues if Europe faces another energy price crisis, a measure the energy industry had strongly opposed.
The European Union is negotiating reforms of its electricity market, designed to expand renewable energy and protect consumers from price spikes such as those following Russia’s invasion of Ukraine last year.
The EU Parliament’s energy committee agreed a position on the reforms on Wednesday, which did not include the revenue cap.
Nicolas Gonzalez Casares, the European Parliament’s lead negotiator, had previously proposed the cap, which would be pre-planned to kick in if energy prices spike again, to raise money countries could spend on cushioning citizens from high bills.
“I think that’s more predictable and it would give more stability to the market. But not all political groups saw it the same way,” he told a news conference.
Industry groups have opposed the cap – which the EU had already applied a temporary version of during this winter after energy prices soared. They said it would deter investors at a time when huge investments are needed in low-carbon energy generation.
From December to June, the EU’s temporary cap had skimmed off revenues above 180 euros/per megawatt hour that power producers made from selling electricity into the market.
Naomi Chevillard, head of regulatory affairs at SolarPower Europe, blamed “regulatory uncertainty” caused by the cap for a slowdown in power purchase agreement deals in Europe last year.
Wholesale electricity prices in Europe have fallen significantly from record highs of above 700 euros/MWh last August, but average prices are still more than double their 2019 levels, according to the International Energy Agency.
EU lawmakers and countries must negotiate the final power market reform, aiming for a deal before EU Parliament elections next year.
Governments are still struggling to agree their negotiating position. Sticking points include whether countries will be allowed to subsidize existing power plants and use any money this raises to, in turn, subsidize their domestic industries.