Electricity market reform: long-term contracts encouraged

On 14 March 2023, the European Commission presented the long-awaited proposal for the electricity market reform. Once published, it became clear that the Commission will not significantly intervene in the functioning of the European electricity market, keeping the marginal pricing intact, and does not support claw-back measures targeting windfall profits on renewable generators. The proposal bears a rather prescriptive character and leaves it up to the Member States to implement measures that favour long-term pricing mechanisms, such as contracts for difference (CfDs) and PPAs, with potential impacts on the GO market. We take a closer look at these proposals and how they could affect GOs.