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 (the “electricity market design reform”) and the other on the protection of the wholesale energy market from market manipulation (“REMIT II”).


The European Parliament and the Council have formally adopted both proposals in H1 2024. REMIT II has entered into force on May 7, 2024, while the electricity market design reform will enter into force on July 3, 2024.


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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