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Consumers will adjust their energy consumption to the supply of solar and wind power

“There should be a single European market for energy. That would allow unimpeded transmission of electricity and natural gas from countries with surpluses to countries with shortages. At the same time, we wish to be more flexible with energy supply and demand. It would be best if the market handled that flexibility, too. It would lead to optimal security at the lowest price”, explains Henk Don, Member of the Board of Dutch energy regulator the Netherlands Authority for Consumers and Markets (ACM), in connection with ACER’s vision on the European energy market for 2025. ACER is the European agency for cooperation between energy regulators.

The European energy market will become more sustainable as wind and solar energy increases, and CO2 emissions decrease. Consumers will turn on their laundry machines, dryers and dishwashers when the wind is up or when the sun is shining brightly. At the same time, all consumers in Europe must be able to count on security of supply at an affordable price. That will become possible as all national grids will be connected to one another. For consumers who produce power, it must be easy to return that power to the grid. The role of the regional network operators will change. They will have to make their networks ready for sustainable energy and more flexible energy consumption patterns. Moreover, there must be a market for energy that can be used when, for example, little or no solar or wind power can be supplied. In such situations, other sources must be activated for energy production such as natural-gas-fired power plants.

Flexible energy consumption

More and more energy becomes available that is generated through wind turbines or solar panels. Its production depends on weather conditions that are highly unpredictable in the short term. ACM supports the creation of a single European energy market where energy users such as consumers and businesses will play a more active role in the market process of supply and demand. In that context, smart meters are a critical tool because they provide users insight into their energy consumption. Consumers will have devices and appliances that can be switched on and off automatically. It is also important that rules are drawn up for the natural-gas market that will enable natural-gas-fired power plants to help produce enough energy efficiently on days when the sun does not shine or when the wind is down.

Countries help each other

For several years already, the Dutch energy market has not been an isolated market within Europe anymore. Not only do we have excellent connections with the countries in the Northwest European market, but also clear arrangements about how energy can be traded in our region. As a result, we are able to benefit from, for example, cheap wind energy in Germany. Furthermore, countries are able to come to each other’s aid when there is a shortage somewhere. Within ACER, ACM continues to actively contribute to the European market design for natural gas and electricity, and to the laying down of that design in European rules (grid codes). A swift introduction of these rules is a key priority of both ACER and ACM.

Clear division of roles

The transition towards a sustainable energy supply calls for a clear division of roles between regulated network operators and commercial market participants. Network operators increasingly engage in commercial activities about which one might ask whether or not the market could do just as good a job or even better than those network operators. Such activities include power storage or charging stations for electric cars. ACM makes sure that network operators do not compete unfairly with commercial market participants. Network operators should limit themselves to their statutory tasks. Commercial activities, insofar they are network-related, are allowed but must be carried out by sister organizations of the network operator.