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Submission to DG Energy: Consultation on a New Energy Market Design
A largely carbon-free power sector by 2050 will require considerable investment, some of which will replace carbon-intensive capacity with more flexible, less carbon-intensive forms of power generation. This need is not only reflected in the ongoing EU discussions on wholesale market design but also on future retail markets, structural reform of the EU Emissions Trading System (ETS) and the “2030 framework for climate and energy policies”. With the drive towards a low-carbon economy, the electricity market will need to make a positive contribution to the successful delivery of these new policy objectives. It is necessary to understand how the low-carbon economy will be brought about, notably what market rules will be required and whether there is a need to adapt the current framework.
This contribution to the Consultation makes the following points:
· Short-term markets can and should be further improved.
· With governments putting capacity mechanisms in place it will be important to focus the debate on how to limit price distortions in energy markets.
· A long-term price signal will be required to trigger future investment.
Christian Egenhofer is Director of CEPS Energy Climate House and Head of the Energy and Climate unit at CEPS. Fabio Genoese was Research Fellow at CEPS