Two-way Contracts for Difference (CfDs) for low-carbon emitting power plants that are in any way subject to state support are one of the most central reforms in the European Commission’s proposal for revisions to wholesale electricity markets.
Brussels’ proposal, to be officially presented tomorrow, has already sparked some criticism from market officials, citing ambiguities and lack of ambition.
A draft of the proposal obtained by energypress indicates there will be no fundamental changes to the EU electricity market’s structure.
The proposal includes measures aimed at establishing a mechanism that would absorb short-term fluctuations in wholesale markets from consumer bills, especially through wider use of long-term contracts.
CfDs, two-way Contracts for Difference, would be central to such an initiative as they could become mandatory for all low-carbon electricity generation technologies (RES, nuclear, hydro, geothermal) that benefit from state support.
In practical terms, all new investments belonging to categories requiring long-term contracts would be remunerated for output based on pre-determined rates, guaranteed by member states. Therefore, RES and nuclear facility prices for output would not be traded at energy exchanges as they would be pre-set.