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EU on track to agree new power market rules by end-2018: Canete

Highlights

Capacity mechanisms, cross-border trade still divide

Need accord to meet national climate plan deadline

Risk-preparedness, ACER updates start final talks

Brussels — EU energy ministers want to agree new common rules on power market design, including emission limits for power plants receiving capacity payments, by the end of this year, according to European Commission energy and climate action commissioner Miguel Arias Canete.

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That was in part because governments will have to submit national plans for meeting 2030 targets for renewables and energy efficiency to the European Commission by the end of 2019, Canete said after an informal meeting of EU energy ministers in Linz, Austria, this week.

"So they need to know all the [applicable] legislation" as soon as possible, he said.

Negotiators from the EU Council, representing the national governments, are in final stage talks with the EC and the European Parliament to agree the remaining files in the EC's clean energy package proposals.

These include new power market design rules intended to increase flexibility to cope with more renewables coming onto the system.

Setting emission limits on the power plants eligible to receive capacity mechanism payments, and the level of cross-border capacity grid operators must make available for trading, remain two of the most contentious issues.

The council wants to allow existing power plants with emissions either above 550g CO2/kWh or 700kg CO2 on average per year per installed kW to receive capacity payments to 2030.

New power plants with emissions above these limits -- i.e. all unabated coal plants -- would not be allowed to take part in capacity mechanisms from 2025.

The parliament, however, wants a single 550g CO2/kWh limit to apply immediately to all new plants starting after the new rules enter into force -- likely to be early 2019, and to all other plants five years after that, so likely early 2024.

Market players are also worried about EU negotiators' plans to oblige all power transmission system operators to offer at least 75% of capacity between all bidding zones for trading by the end of 2025.

European power trade association Eurelectric and European energy traders' group Efet say that any such targets should be tailored for each border based on local conditions.

EU negotiators are due to meet next on October 18 to discuss these market design issues.

They will also meet on September 25 to discuss the EU electricity risk-preparedness regulation and on September 26 to discuss the updated rules for governing EU energy regulatory agency ACER.

These are the remaining two files from the EC clean energy package proposals published in November 2016. They are less contentious than the market design proposals, according to an EU source.

Both the council and the parliament have to agree common texts for each proposal in order for them to become binding.

--Siobhan Hall, siobhan.hall@spglobal.com

--Edited by Daniel Lalor, daniel.lalor@spglobal.com