Market reforms, demand response enter flexibility mechanism talks

Officials of RAE, the Regulatory Authority for Energy, currently engaged in talks with represnentatives of the European Commission’s Directorate-General for Energy and Directorate-General for Competition, in the Greek capital to attend “The Athens Conference on European Energy Law amd Policy”, are grappling with electricity market reform issues, which need to be resolved before any new capacity mechanisms are successfully implemented.

Electricity market reforms need to be implemented to ensure fair payment for gas-fired power units through an effective flexibility remuneration mechanism before RAE’s proposed mechanism can be further discussed.

A maximum remuneration amount of 25,000 euros per MW set by RAE, significantly less than the 45,000 euros per MW offered to producers through the previous mechanism, stands as a core issue.

The absence of the demand response mechanism, and, by extension, major-scale consumers, including industrial, from the new model, is another major issue. RAE will need to convince Brussels officials of this intention.

The European Commission has insisted on including the demand response mechanism (interruptability) in the temporary flexibility remuneration mechanism (CATs), but RAE has not made any such provisions.

RAE contends that there are no immediate prospects for the implementation of a flexibility remuneration mechanism that includes a demand response mechanism.