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EU negotiators agree for dynamic pricing of electricity

24 October 2018
Electricity
energynomics

Energy companies with more than 200,000 clients will be obliged to provide households with at least one offer comprising dynamic price contracts, under an EU-level agreement reached behind closed doors last week, EURACTIV.com has learned.

European Union legislators made headway on a proposed overhaul of EU electricity market rules, striking an agreement on “aggregators” – or virtual power plants, which make money from storing electricity or managing the energy consumption of their clients.

The deal on dynamic prices makes way for aggregators to enter the electricity market en masse and disrupt the sector in the same way that virtual network operators disrupted the telecoms market.

Under the agreement, aggregators won’t have to ask energy suppliers for prior permission to enter the market. In exchange, energy suppliers will receive compensation in case the electricity they produce is lost. Details of the compensation are still to be agreed, according to Euractiv.com.

Florent Marcellesi, a Spanish lawmaker, represented the Greens in the European Parliament delegation during three-way talks with EU member states and the European Commission which took place behind closed doors last Thursday (18 October).

“I am glad that we removed the possibility for member states to impose prior consent of the supplier before letting an aggregator enter the market,” Marcellesi told EURACTIV in e-mailed comments.

This is “very important” because the supplier is often a competitor and has every incentive to bloc aggregators from entering the market, explained Frauke Thies, from Smart Energy Europe, a business association.

Aggregators make money from pooling the electricity consumption of households and selling off their unused power during peak hours, when demand is high. With rising shares of intermittent renewables, they are considered essential to provide demand management services, which provide flexibility to the power system.

“In a system with more and more variable renewable electricity injected into the grid, demand-response is more necessary than ever,” Marcellesi said. “Reaching a critical mass of demand-response can only be achieved via the development of aggregation,” he said.

The agreement on aggregators and dynamic pricing was “a big concession” from EU member states, said Manon Dufour, the head of Brussels office at E3G, an environmental think tank.

“Any supplier with 200,000 clients must have at least one offer with dynamic price contracts,” Dufour explained. This means energy providers that propose fixed electricity prices to households, such as EDF in France, will now also be obliged to propose dynamic price contracts.

She said the clause will “guarantee enough competition on this type of contract to attract consumers” and unlock demand-side management services in the energy sector.

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