Czechs against capacity mechanisms, regional centres in Winter Package

Czech Minister of Industry and Trade Jan Mládek [Ministerstvo průmyslu a obchodu ČR/YouTube]

Electricity market design should provide equal conditions for all energy sources, avoid capacity mechanisms and build on bottom-up regional cooperation, according to the Czech Republic. EURACTIV.cz reports.

The EU needs to change its perception of the energy system, as it is shifting from a centralised electricity market to a more decentralised one, the Commission’s Vice-President Maroš Šefčovič told a conference in Brussels on Tuesday (31 January).

In a jumbo legislative package presented in November, the Commission submitted several proposals focusing on a new power market in Europe.

One of the aims of the so-called Winter Package is to put consumers at the centre of the Energy Union, the Commission says.

“Consumers need a chance to become active and central players on the energy markets. Their role has already become more important thanks to microgeneration, electric vehicles and smart systems. The road to decentralisation opens a new world full of business opportunities,” DG Energy’s Florian Ermacora said at the conference hosted by the Permanent Representation of the Czech Republic to the EU.

Energising European recovery

Last year’s Winter Energy Package contains the seeds of two fundamental economic and political requirements needed for the EU to prosper: returning some ‘power to the people’, alongside European investment and network integration, write a number of energy experts.

Member states have already begun and MEPs are about to start their negotiations on the package with the aim to make the internal electricity market work across the whole EU.

Equal conditions

“Because of the changing character of energy systems, it has become difficult to complete the internal market. Therefore, we need to continue in a thorough discussion,” chairman of the Parliament’s Industry, Research and Energy (ITRE) Committee Jerzy Buzek stressed.

According to Buzek, the EU should promote demand-side response, new business models, remove administrative barriers, develop smart grids and fight energy poverty to achieve its goals.

For the internal energy market to work well, it is important to integrate renewable sources of energy into the market reduce regulatory burden and remove distortions, other speakers underlined at the conference.

“All market players and all resources should be subject to equal conditions and to the same obligations,” Pavel Cyrani of the board of directors of the partly state-owned Czech energy company ČEZ said.

He added that exemptions for small renewables and cogeneration, or the last curtailment rule for renewable sources, should be phased out in order to ensure equality among all low-carbon energy sources.

“We need to integrate renewables and avoid subsidies,” Ermacora said. He stressed the EU should not forget about its conventional sources, as they will still play an important role in a near future.

That could be observed during the past few weeks when Europe faced low temperatures, according to ČEZ’s Cyrani. “Energy saving or demand response was not a solution due to extreme freeze and the need to heat up homes,” he said.

Capacity mechanisms

When deciding about ways to ensure stability for investments in conventional power plants, Europe will have to choose between the energy-only market and capacity mechanisms designed to remunerate the availability of electricity generation.

“The capacity remuneration mechanisms (CRM) are being created as there is a lack of market signals,” Jiří Feist of the board of directors of Czech energy company EPH said, stressing that the support schemes have to be technologically neutral. “Each technology available must be taken into consideration,” Feist told the conference.

Commission and member states clash over capacity mechanisms

The European Commission fears that capacity mechanisms would just translate into subsidies for coal power plants. Therefore, installations exceeding emission limits should not take part in support schemes, according to a proposal under the Energy Union’s Winter Package. EURACTIV Czech Republic reports.

Large part of EPH’s business strategy consists in purchases of coal power plants across Europe. The private company seeks to benefit from various capacity mechanisms in countries such as the United Kingdom and Germany.

On the other hand, the Czech government does not support the idea of CRM development in Europe.

“We want to have a market without distortions. If there is a need to create capacity mechanisms, they must be the last resort measure in cases of resource inadequacy, and they have to be market-based, technologically neutral and open to cross-border participation,” Czech Minister of Industry and Trade Jan Mládek said.

Regional cooperation

Mladek criticised the idea of regional operational centres (ROCs), which should complement the role of transmission system operators by taking over a part of their rights and responsibilities. According to the Commission, ROCs should strengthen regional cooperation and help to find commons solutions to the problems of current energy systems.

“We should focus on a bottom-up voluntary cooperation which works well. The 4M market coupling, integrating the markets of the Czech Republic, Slovakia, Hungary and Romania, is a good example,” Mládek said.

In the end, if there is an emergency situation, national governments will be responsible vis-à-vis their citizens, not any regional entity. The rights of the regional operational centres should reflect this,” ČEZ’s Cyrani also underlined.

Polish power rep: Commission’s vision of the electricity market is 'slightly utopian'

Current market failures are well identified in the Winter Package. However, we feel that some of the proposals do not match the reality, Maciej Burny told EURACTIV Slovakia.