Austrian legislation should already target a post-support scheme era for renewable energies
EPEX SPOT and EEX respond to consultation on Renewable Energies Expansion Act
Paris / Vienna, 9 November 2020. The European Power Exchange EPEX SPOT and the European Energy Exchange (EEX) published their joint response to the consultation of the Austrian Renewable Energies Expansion Act (EAG Package). The full statement is available here (in German).
Both exchanges welcome that the EAG Package largely focuses on the market integration of renewable energies. This includes the introduction of a market premium as an improvement compared to the current feed-in tariff and the increased tendering of funded projects as well as investment grants.
However, EPEX SPOT and EEX question the planned design of the market premium as a symmetrical market premium, which hampers the market and system integration of renewable energies. The exchanges also raise concerns over introducing a rule that the market premium shall only be dispensed with if there are negative prices on the wholesale markets for six hours in a row. Both companies are also skeptical about the idea to incentivise the joint trading of electricity and guarantees of origin due to potential negative impacts on the liquidity of the wholesale market.
In addition to this, EPEX SPOT and EEX urge the Austrian government to already focus on a post support-scheme era in order to prepare this important step thoroughly. They suggest to test support schemes that incentivise innovation in the energy market, limiting subsidies to a minimum while consequently extending market participation. Only by fully aligning to the market price, the activity of market participants will benefit the overall system. Market participants must have the right incentives to bid on the wholesale market at their real marginal costs, i.e. on the basis of the merit order. As a consequence, the market price signal would remain undistorted, even if the share of renewable energies increases.
Arnold Weiss, Head of Austrian Office of EPEX SPOT, comments: “This has been the largest legislative package on the Austrian electricity market for over a decade, and it represents a decisive step towards the full integration of renewables into the Austrian power market. A market-based approach is essential to allow for a cost-efficient energy transition. Only full participation in the market allows for the generation of additional revenues while lowering the necessary subsidy schemes, with a direct reduction of costs for the Austrian end-consumer.”
Already today the innovative short-term markets of EPEX SPOT contribute largely to the integration of renewables. Performant continuous and auction-based Intraday trading, diverse 15 minute contracts and short leadtimes are important tools for actors to market renewable electricity, which is intermittent and subject to last-minute changes of generation profiles.
The European Power Exchange EPEX SPOT SE and its affiliates operate physical short-term electricity markets in Central Western Europe, the United Kingdom and in Denmark, Finland, Norway and Sweden. As part of EEX Group, a group of companies serving international commodity markets, EPEX SPOT is committed to the creation of a pan-European power market. Over 300 members trade electricity across twelve countries on EPEX SPOT. 49% of its equity is held by HGRT, a holding of transmission system operators. For more information, please visit www.epexspot.com.