On March 14, 2023, after a consultation started on January 23, 2023 and ended in February 13, 2023, the European Commission proposed a reform of the EU electricity market, aimed at reducing the strong volatility of wholesale electricity prices - influenced by the sharp increase in natural gas prices - and creating favourable conditions for investors in low-carbon energy.  The reform includes two legislative proposals: one on the EU electricity market design and the other on the protection of the wholesale energy market from market manipulation.


The European Parliament and the Council have approved both proposals at the end of 2023, and the reform will enter in force following its formal adoption and publication on the Official Journal of the EU.


More specifically, the reform focuses on the following topics: (i) making electricity bills more independent from the short-term cost of fossil fuels; (ii) limiting revenues of inframarginal generators; (iii) improving the efficiency of short-term markets; (iv) facilitating and incentivising non-fossil flexibility services for renewables integration; (v) increasing consumers’ protection and empowerment; (vi) enhancing the transparency of the energy market and protection against market manipulation; (vii) generation and system adequacy for a decarbonized electricity system.

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