EU energy ministers today reached a provisional compromise on reforming the bloc’s electricity market, three EU diplomats said, ending a months-long impasse in negotiations stalled by disagreements on the use of subsidies for energy investments.
Negotiations had been stalled for months due to a Franco-German dispute over the use of state-backed investment programs for clean energy projects. These schemes, known as Contracts for Difference (CfD), allow governments to claw back profits from energy producers when electricity prices rise.
At the heart of the conflict was Germany’s fear that the new rules would allow France to take huge profits from its gigantic nuclear fleet – which powers 70% of its electricity – and redistribute them to its industry, giving it thus a competitive advantage. Paris has insisted that energy policy is a sovereign choice and that the bloc benefits from its cheap atomic electricity.
In a concession to France, energy ministers today agreed that governments “could decide” to apply CfDs to investments aimed at “substantially re-powering” existing electricity generators, “increasing their capacity or to extend their lifespan,” according to the final draft text obtained by POLITICO. , as well as future energy investments. This could allow Paris to use CfDs to extend the life of its old nuclear reactors.
But in a nod to Germany, the countries also agreed that CfDs should be subject to certain “design rules” determined by the European Commission. These rules should ensure that any redistribution of income “does not create undue distortions in competition and trade in the internal market”, says the document, where CFDs are not subject to competitive auctions.
The compromise comes a week after French President Emmanuel Macron met with German Chancellor Olaf Scholz to iron out their disagreements over energy policy in Hamburg.
The proposal will now move on to interinstitutional negotiations with the European Parliament, which reached its own compromise position last month.