EU Lawmakers Ease Concerns on Power Market Intervention

(Bloomberg) -- European Union lawmakers allayed market concerns over a possible revenue cap on renewable power producers, an emergency measure blamed for hampering investment in the sector.

Nicolas Casares, the Spanish socialist deputy in charge of negotiating the file in the European Parliament, had been pushing for a cap that would mirror an emergency measure put in place last year following the energy crisis caused by Russia’s invasion of Ukraine. However, he wasn’t able to find enough support from other political groups in parliament.

Instead lawmakers backed an amendment requesting that the European Commission come forward with possible options for a “temporary relief valve mechanism” by June next year, including a possible proposal. While it didn’t stipulate how it would be designed, such a facility is associated with a temporary price cap during a crisis.

The decision will provide some relief to solar and wind power producers who said that the emergency cap would hurt investment in renewables, which need a huge amount of funding to meet the EU’s ambitious climate and emission-reduction targets. Their fear was that it would be made permanent by including it in the overhaul of the power market.

Lawmakers voted to enter into negotiations on the final shape of the deal with the bloc’s 27 member states, skipping further amendments in the wider assembly. Countries are currently deadlocked on negotiations on their own position, but have backed plans for a voluntary revenue cap on so-called inframarginal producers that provide electricity at a cost below prices set by more expensive generators.

“Countries should look at our solution,” said Maria Carvalho, a lawmaker from the center-right European People’s Party, who helped lead negotiations. “We have a sound, balanced, pro-market solution that still protects the consumers.”

(Updates with quote in sixth paragraph.)

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