The EU electricity market will change in 2023. A project of the European Commision that is under debate right now is aiming to change how the cost of electricity is calculated to protect consumers from short-term market volatility.
The EU also wants to ramp up the installation of new „green energy” capacities to reach its zero-emissions target by 2030, writes eToro analyst for Romania, Bogdan Maioreanu.. Despite the challenging global situation, in 2022 the renewable energy capacity increased but Europe is still lagging behind Asia.
At the end of 2022, global renewable generation capacity amounted to 3372 GW. Renewable hydropower accounted for the largest share of the global total, with a capacity of 1256 GW, shows the latest report of the International Renewable Energy Agency (IRENA). Renewable generation capacity increased by 295 GW (+9.6%) in 2022. Solar energy continued to lead capacity expansion, with a massive increase of 192 GW (+22%), followed by wind energy with 75 GW (+9%).
Asia accounted again for about 60% of new capacity in 2022, increasing its renewable capacity by 174.9 GW to reach 1.63 TW (48% of the global total). A huge part of this increase occurred in China (+141 GW). Capacity in Europe and North America expanded by 57.3 GW (+8.8%) and 29.1 GW (+6.3%) respectively.
The EU capacity of renewable energy rose from 337 GW in 2013 to over 569 GW in 2022. According to the report, in the same period Romania capacity grew with only 1.04 GW to a total of over 11 GW. In this context, the latest news that Hidroelectrica – the largest power producer company in Romania – signed a joint venture with Masdar company to develop floating solar & offshore wind projects with a capacity of 2 GW, is good news.
In the next few years, all energy system models foresee a dramatic increase in electricity demand to achieve the EU’s net-zero target, according to a Bruegel analysis. As substantial shares of heating, transport and industry demand must be electrified, 4900–6500 TWh of electricity demand in 2050 compared to 2800 TWh in 2020. But the recent energy crisis imposes some measures to protect consumers and avoid uncontrolled rise in prices like in the past two years.
Electricity market design is a central political issue in 2023. As electricity consumers face record energy costs, the European Union has promised to address these through market design changes. The latest European Commission project, currently under debate, aims to change the current situation by encouraging long term contracts in order to de-link the price received by energy producers from the spot markets. The changes are aimed to decouple consumer prices from the short – term volatility in the markets and to reduce the influence of gas prices in electricity prices.
Investors are also waiting for the new EU energy market regulations to understand what risks it mitigates and what new risks might introduce in the market. Also how will push forward green energy generation. But one thing is very clear. The demand for electricity is increasing and current capacities will have to grow to face this increase, at a higher rate than in the present triggering investments too.