EGEC welcomes the European Commission's proposal on Electricity Market Design (EMD) and more specifically the support brought to geothermal electricity.
The aim of the legislative proposal is to enhance the resilience of the EU's electricity system; lessen exposure to energy price shocks from volatile fossil fuel utilisation; and ensure affordable electricity for families and industry.
A key feature of geothermal energy is its near permanent supply of renewable electricity coupled with its flexibility. This sets it apart from other renewable energy sources and fossil sources. Over 1 GWe of geothermal energy is currently installed in the EU. This number needs to quickly ramp up to meet the EU's 2030 climate and energy targets. Today's proposal helps geothermal by providing support measures that value the additional services it provides to Europe's electricity system such as grid stability, system adequacy, flexibility and resilience.
In response to the proposal, Philippe Dumas, Secretary General of the European Geothermal Energy Council, said: "The Commission's Electricity Market Design brings new and very welcome opportunities for geothermal electricity, especially as it is a supplier of baseload or dispatchable renewable electricity". He added, "All flexibility options, including energy system integration, require robust incentives and rules to make this regulation fit for purpose today and tomorrow."
One of the aspects of the EMD proposal is to increase the use of long-term contracts, such as Power Purchase Agreements (PPAs) and two-way "Contracts for Difference" (CfD) to provide households and businesses with more predictable and stable energy bills. From a geothermal energy perspective, PPAs and CfDs alone will be insufficient to cover upfront construction costs, which comprise the bulk of the total cost of a geothermal installation. Therefore, additional instruments will be required to ensure Europe benefits from the mass deployment of geothermal electricity.
Furthermore, we call on legislators to include provisions on tendering procedures for electricity from renewable energy sources as well as increasing the use of technology-specific and non-price criteria in auctions.
