The European electricity market reform marks a step towards a greener and more resilient future. With a focus on reducing GHG emissions, improving market stability, and empowering consumers and industries alike. The new Electricity Market Reform aligns with the heart of sustainable progress embedded in the European Green Deal.


One of the main pillars of this reform is the focus on giving greater contractual freedom and direct access to energy produced from renewable sources. Renewable energy suppliers can enhance investment certainty and reduce financial risk by utilizing long-term contracts, resulting in predictable revenues. This will clearly incentivize the development of new renewable energy facilities, a vital step in meeting clean energy goals. But that’s not all – fixed-price contracts take the stage as another crucial player in this reform. Designed to provide more stability and protection against price fluctuations, these contracts are poised to give the required boost to renewable energy projects, attracting investors and supporting long-term sustainability.


Moreover, the reform acknowledges the significance of flexibility, realizing that each member state has unique electricity needs. As such, it grants these states the authority to assess their individual needs and implement tailored solutions to address energy challenges effectively. Envision a future where renewable energy becomes the standard, greatly reducing our dependence on fossil fuels. This transformative initiative represents a major step toward achieving that vision, fostering a win-win scenario for both the environment and the economy.


What is Energy Sharing?

The proposed energy reform will introduce an “energy sharing” system that enables private citizens to become “prosumers.” These proactive individuals will consume renewable energy and produce it through different sustainable technologies like solar panels, wind turbines, etc. The surplus energy they generate can then be shared with their community of neighbours, fostering a sense of solidarity and sustainable development.


Empowering Small Consumers

One of the most significant benefits of this reform is its potential to empower small consumers. With the conventional energy market dominated by large utility companies, it can be challenging for individuals or small businesses to access and benefit from renewable energy sources. Energy sharing will break down these barriers, allowing smaller players to actively participate in the renewable energy revolution and contribute to a greener future.


Global Renewable Energy Growth

This reform comes at an opportune moment, as the International Energy Agency’s (IEA) annual Electricity Markets Report has projected considerable growth in renewable energy. Over the next three years, renewable energy is expected to surge, becoming a driving force behind global energy supply and electricity demand.


The report highlights that emerging and developing economies, notably China, India, and Southeast Asia, will play a pivotal role in this growth. Approximately 70 percent of the projected increase in renewable energy generation will come from these regions. This shift towards renewable energy in dynamic economies indicates well for the global fight against climate change and aligns perfectly with the European Union’s ambitious energy market reform.


Supporting the Reform 

The IEA report sets an overall framework that reinforces and supports the upcoming energy market reform in the European Union. It validates the direction the EU is taking and strengthens the case for embracing renewable energy and enabling energy sharing among citizens. By leveraging the predicted growth in renewable energy production from emerging economies, the EU can position itself as a global leader in sustainable practices and inspire others to follow suit.


Here are some insightful predictions and developments that are shaping the global energy landscape. Recent forecasts indicate that the days of coal and gas dominance are numbered, as renewable energy sources surge to claim their rightful place.


The IEA predicts a significant decline in coal and gas consumption, with coal expected to drop by 10 percent and gas by nearly 12 percent over the forecast period. This shift aligns with the world’s increasing commitment to sustainability and environmental responsibility. Renewables, the champions of clean energy, are set to be at the forefront, representing 35 percent of the global electricity mix by 2025, up from 29 percent in 2022.


But it’s not just renewables stealing the spotlight. 

The IEA also foresees a resurgence in nuclear generation, indicating that a diverse mix of low-carbon technologies will play a key role in powering our future. It’s encouraging to see that despite the global energy crisis and extreme weather events impacting different regions, electricity consumption in 2022 only experienced a minimal slowdown of 2 percent. However, this steady demand comes with a warning, as power sector emissions reached an all-time high in the same year. Fortunately, there’s a silver lining. The IEA’s projections suggest that emissions from the power sector are expected to decline by an average of about 10 percent per year until 2025. This trend is a result of the growing adoption of renewables and other sustainable energy solutions, signifying a positive shift towards a cleaner energy future.


One crucial aspect mentioned by the IEA is the increasing dependence on climate conditions to meet electricity demand. This growing reliance necessitates the energy system flexibility and expansion to ensure supply and network resilience and security. Executing solutions like demand response and energy storage will reduce the sector’s reliance on fossil fuels, leading to a decrease in electricity prices, as noted by Kadri Simons. The path towards these transformative changes will involve market reform, which must undergo the regular approval process by the Parliament and the Council. The hope is that an agreement will be reached within this year, paving the way for a more sustainable and resilient energy future.