New rules making the EU’s electricity market fit for the future and putting the consumer at the center of the energy transition were approved by the European Parliament on 26 March – an important step in enabling the European Union and its Member States to embrace the clean energy transition, follow up on the already adopted 2030 climate legislation and meet the Paris Agreement commitments.

The new rules plan to create a Europe-wide market for electricity that is cleaner, more competitive and better able to cope with risks.

MEPs adopted four new laws on the EU electricity market, agreed informally with EU ministers in late 2018, and hereby conclude the Clean Energy for All Europeans package.

The agreement on the “Internal market for electricity” (Regulation) was approved with 544 votes to 76, and 40 abstentions. The agreement on “Common rules for the internal electricity market” (Directive) was approved with 551 votes to 72, and 37 abstentions, the European Parliament said in a press release.

“The reform of the EU electricity market should make it more competitive across EU borders and support the transformation to cleaner electricity,” the rapporteur on the internal market for electricity Polish MEP Jerzy Buzek from the EPP said after the vote. “It gives more power to consumers and protects the energy-poor. It is good for the environment and good for the wallet,” he added.

On March 26, the European Commission welcomed the Parliament’s adoption of new electricity market design proposals. “I thank the European Parliament for its strong support for the clean and fair energy transition, taking the EU a step closer towards delivering the Energy Union with citizens at its core, one of the key priorities President (Jean-Claude) Juncker set out for this Commission,” Climate Action and Energy Miguel Arias Cañete said. “Today’s approval of the new electricity market design will make energy markets more flexible and facilitate the integration of a greater share of renewable energy. An integrated EU energy market is the most cost-effective way to ensure secure and affordable supplies to all EU citizens. I am particularly pleased that we have agreed on a common framework for capacity mechanisms that will ensure such mechanisms will be in line with our climate objectives in the future while taking into account legitimate security of supply concerns,” the Commissioner added.

Consumers will benefit substantially from the new rules, as they will have access to smart meters, dynamic pricing and the option to switch provider at no cost within a maximum period of three weeks and 24 hours by 2026, the Parliament said.

Member states will also still, under strict conditions, be able to regulate prices temporarily to assist and protect energy-poor or vulnerable households. However, social security systems should be the primary means of addressing energy poverty.

One of the main objectives of the new rules is to allow at least 70% of trade capacity to cross borders freely, making it easier to trade renewable energy across EU borders and hence support efforts to reach the EU’s binding goal of 32 % renewables by 2030.

EU rules currently allow national authorities to pay power plants to be on stand-by for a limited period of time if there is a demand peak, known as capacity mechanisms. The new rules will introduce stricter limits for member states subsidising power stations to prevent the most polluting fossil-fuelled power plants in Europe from receiving state aid. The measures will apply to all new power plants from the date on which the Regulation enters into force and to existing ones from 2025. Capacity contracts concluded before 31 December 2019 will not be affected by the new rules.