Late Proposal to Extend Subsidy Slows EU Energy Market Plans

A late proposal to extend subsidies for coal plants has upset European Union countries’ plans to approve a reform of the bloc’s power market on Monday, which was designed to shift the electricity system towards cleaner energy.

EU countries’ energy ministers are meeting in Luxembourg on Monday to agree a joint stance on new EU power market rules, aimed at expanding low-carbon power and avoiding a repeat of last year’s energy crisis, when record-high gas prices left consumers with soaring energy bills.

The proposed reform aims to make power prices more stable and predictable, by putting new state-backed renewables and low-carbon nuclear plants onto fixed-price “contracts for difference”. Ministers need to iron out details like how to spend any revenues raised by these subsidy schemes.

But the talks have been complicated by a late proposal by Sweden, which holds the EU’s rotating presidency, to allow countries to prolong capacity mechanism subsidies for coal power plants, under which they are paid to keep enough power generating capacity on standby to avoid blackouts.

Poland – which could prolong its support scheme for coal plants beyond 2025 under the proposal – said last week the idea had majority support.

Ruters/Hauwa Abu