Germany has taken a step back permitting France to use state subsidies to fund its nuclear power plants, a development that has enabled EU member states to establish a wider agreement on electricity market reforms.

As part of the new EU rules, governments will be free to use funding structures known as contracts for difference (CfD). These set a minimum price guarantee for electricity suppliers, as well as a price ceiling, above which the state can recover any revenue.

EU member states backed the reforms almost unanimously at yesterday’s EU energy council, Hungary being the only member state to vote against the electricity market revisions.

It was agreed that CfD contracts will be mandatory, with certain exceptions, when public funds are used in long-term contracts.

Also, CfDs will be used for electricity generation investments using photovoltaic, geothermal, hydro and nuclear technologies, in order to provide predictability and stability.

The EU energy council agreed to provide flexibility in how member states can distribute revenues generated by CfD contracts. As a result,  these revenues will be able to be distributed to consumers and also to finance mechanisms reducing electricity costs.

CfD regulations will be implemented following a three-year transitional period for all electricity production sectors except offshore wind farms, to be given a five-year transitional period.

EU ministers have been negotiating reforms to the bloc’s electricity market for months, the objective being to offer RES developers better investment signals and secure consistent electricity supply to prevent price spikes.