Dáil Éireann Debate, Tuesday - 28 April 2026
280. Deputy Roderic O'Gorman asked the Minister for Climate, Energy and the Environment if his Department is carrying out research or examinations of the potential impact of EU proposals to decouple the renewable electricity price from fossil fuel prices; the way he will ensure that this will not disincentivise further renewable energy projects; and if he will make a statement on the matter. [29620/26]
Amharc ar fhreagraThe EU’s current power market design rules, Electricity Market Design (EMD), entered into force in July 2024 prompted by the energy price crisis following Russia’s invasion of Ukraine which caused record high gas and power prices in 2022.
Following the recent conflict in the middle east, a number of measures have been proposed by the European Commission to better insulate electricity prices from the impact of high fossil fuel prices. However, there has been no proposal to change the marginal price system whereby the last power plant required to meet demand in a given half hour sets the price.
Moving away from marginal pricing as a way to decoupling wholesale electricity prices from gas was discussed in detail during the EMD legislative negotiations. However, no viable alternative was identified at that time due to any change to marginal pricing having potential negative consequences.
Instead, the updated EMD rules aimed to mitigate such volatile spot prices for generators and end users by, among other things, encouraging them to sign long-term contracts, such as power purchase agreements (PPAs) and two way contracts for differences (CFDs), for renewables and low-carbon technologies like nuclear.
In Ireland, the Renewable Electricity Support Scheme (RESS) operates as a two-way Contract for Difference (CfD) which provides price certainty for supported renewable generation while also ensuring that, when wholesale electricity price exceeds the strike price, supported projects pay back the difference into the Public Service Obligation (PSO) rather than draw support for it.
The existing RESS design therefore not only supports renewable electricity investment by providing stability and certainty to projects but also returns value to consumers in periods where wholesale prices are elevated. Accordingly, this mechanism helps to moderate the impact of future wholesale price volatility for consumers and in effect decouples renewable electricity prices from fossil fuel prices. Policy in respect of pricing options, including those proposed by the European Union, are being analysed by the National Energy affordability Taskforce.
