Geothermal in the European electricity market

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The European Union is in charge of laying the rules for the operation of the European electricity markets, with the objective of a unified European electricity market. Among the main measures carried forward by the EU is notably the unbundling of the networks (where producers of electricity and operators of the network have to be different), the opening of network to third party (so that monopolistic companies cannot prevent new actors to come and challenge their position). Besides, with the first renewable energy directive, the EU introduced the notion of priority dispatch and priority access for renewables. This allowed renewable energy producers to be sure to supply any electricity they produced to the grid – which alongside feed-in-tariffs was a key measure allowing the rapid development of renewable electricity capacity in Europe. Geothermal plants are among the beneficiaries of such incentives for new RES capacity, however this framework is changing with the consideration of several legislative proposals on the electricity market design by the European institutions.

The different legislative pieces of the Electricity Market Design were agreed upon by the European Parliament and the European Council in December 2018, and is to be voted in March 2019. It lays the foundation of an electricity market structured around renewable production and digitalization. It is also to guarantee the security and the continuity of the supply of electricity. To that end, the proposals go in the direction of greater exposure of renewable producers to the market (no priority dispatch/access for new plants except for demonstration projects and very small installations), and introducing capacity remuneration mechanisms to guarantee there is enough dispatchable capacity in a system with high intermittent capacity. However, the current proposals from either Parliament, Commission or Council fail to acknowledge the role that dispatchable and flexible renewable electricity sources such as geothermal can play in the future European electricity system.

EGEC is active in promoting the role of geothermal energy as a cornerstone of a decarbonised and renewable electricity market:

EGEC factsheet on geothermal a flexible renewable electricity resource

Small is beautiful campaign

EGEC press release in reaction of the vote on the electricity market regulation in the EP

joint RES association statement for an electricity market fit for renewables

For more of EGEC's position on this topic and on others, go to the Position papers section of the website

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