Table.Briefing: Europe

Electricity market reform + Data Act + Sánchez under pressure

  • Commission consults on electricity market reform
  • Data Act: ‘So much clarity that no lawyer is needed’
  • Spain: Sánchez comes under pressure in election year
  • Renewables: EU regulation becomes German law
  • Gigabit Plan: Commission wants to simplify broadband expansion
  • German Federal Cartel Office initiates proceedings against PayPal
  • EU states to finance more weapons for Ukraine
  • Opinion: Europe’s Single Market – turning 30 and still going strong
Dear reader,

For some of the ideas for the electricity market reform, there will probably not be enough time until the end of the legislative period, as the EU Commission itself admits. But the remaining proposals would also be a huge undertaking. Christian Ehler, coordinator of the EPP in ITRE, already warns against sky-high expectations. Manuel Berkel has read the 27 pages of the Commission’s consultation on electricity market design and summarizes the most important points.

A flourishing data market holds great opportunities – but legal uncertainty has so far been a major obstacle for companies, said Alena Kühlein, Head of the Digital Economy Unit at DIHK, in yesterday’s Table.Live briefing. She, therefore, wants more security from the Data Act, not more confusion. Corinna Visser also heard from Sicco Lehmann-Brauns from Siemens and MEP Damian Boeselager (Greens/EFA) about the demands made on the Data Act during the discussion.

Tens of thousands took to the streets in Madrid on the weekend to demonstrate against the policies of Prime Minister Pedro Sánchez. At the beginning of a year in which Spain is holding regional and parliamentary elections, the head of government is under pressure. He is accused of forming alliances with separatists in Catalonia and other regions. And that is not his government’s only problem, as Isabel Cuesta reports.

If you like Europe.Table, please forward us. If you have been sent this email: Here you can test this and many other briefings for free.

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Sarah Schaefer
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Feature

Commission consults on electricity market reform

The consultation on electricity market reform has not been slim. The Commission sets out its ideas on 27 pages. For some topics, however, the authority itself admits that they will probably not be implementable by the end of the legislative period. “Some of these challenges will require further policy consideration beyond the scope of the current reform,” the Commission writes, citing capacity mechanisms and local price signals as examples. However, even the rest would be a mammoth program.

In its logic, the consultation largely follows the Commission’s four-part non-paper from mid-December. What consumers pay for electricity should no longer depend so much on the short-term costs of fossil energies. The most critical point would be retroactive interventions in the remuneration of existing plants. The member states had only agreed to skim off exceptionally high revenues as a temporary crisis measure. As announced in the non-paper, the Commission is asking whether the rules on revenue absorption should be extended so that they can be reactivated, for example, in the event of further crises.

Possible risk for investors

However, the Commission is also discussing more structural interventions for existing plants:

  • “Stronger incentives” for generators to market some of their existing capacity through long-term power purchase agreements (PPAs);
  • Member states could be given the right to voluntarily open tenders for renewables to existing plants and remunerate them through two-way contracts for difference (two-way CfDs);
  • However, member states could also be given the option to retroactively force existing plants into CfDs and re-determine the remuneration.

Regarding the last option, however, the Commission warns of uncertainty for investors seeking to develop renewable energy: “This could jeopardize the risk for the necessary investments in this type of electricity generation, increase the cost of these investments and thus be counterproductive.” In addition, the move could conflict with Article 6 of the Renewable Energy Directive (RED).

Long-term electricity trading

Like Eurelectric, the Commission sees the strengthening of long-term power trading as a way to shield consumers from short-term price spikes. With REPowerEU, the Commission showed member states several ways to support the market penetration of long-term PPAs in May 2022.

One goal is still current: SMEs and not just energy-intensive, large industrial companies should also be able to hedge more easily against strong fluctuations in electricity prices – for example, through government loan guarantees for and pooling of PPAs. In the consultation, the Commission now mentions another possibility: obliging energy suppliers and large industrial companies to procure part of their portfolios via PPAs.

In the case of contracts for differences, it is striking that the Commission always asks whether rules for CfDs should be technology-specific, which would, for example, allow special rules for more expensive nuclear power or bioenergy. The agency also asks about the impact of more support via CfDs on the more market-based instrument of PPAs. In an interview with Europe.Table, Eurelectric Secretary General Kristian Ruby had already pointed out that long-term markets are not very liquid, partly because many European countries already remunerate renewables via contracts for difference.

Renewables are also a topic

Surprisingly, the consultation also includes a short section on renewables – new input for the ongoing trialogue on the RED was not actually announced. The Commission specifically asks for a connection guarantee for hybrid offshore wind farms that want to feed electricity into the grids of two member states. Another topic is investment in the power grids and possible adjustments to grid charges. Eon CEO Leonhard Birnbaum announced only last week that as Eurelectric president he wanted to push for this in view of increased interest rates.

As announced in the non-paper, the consultation also includes sections for an amendment to market supervision and the corresponding REMIT regulation for improved consumer protection and for fine-tuning the short-term markets. Under the last point, in particular, the Commission has assembled a hodgepodge of proposals that read more like work orders to various units and directorates general for the next legislature.

These range from submetering in metering to a new peak-shaving product for grid operators to adjustments in emissions trading that could incentivize more flexibility in the electricity market.

Ehler: deep intervention not realistic

The catalog of tasks for regulating the end-customer markets is also extremely ambitious – from energy sharing and harmonized rules for substitute supply to the permanent possibility of state-regulated prices.

One experienced negotiator in parliament is already warning against expecting too much. “A promise to citizens to massively reduce prices with a few simple interventions in the electricity market would probably end up as a pipe burst,” says CDU MEP Christian Ehler, EPP coordinator in ITRE.

The main reasons, he said, were the shortage of time and the different interests in the Council. “I think new rules for contracts for differences are feasible. However, it is not realistic to achieve far-reaching intervention in the electricity market by the end of the legislative period,” Ehler told Europe.Table last week.

  • EU
  • European Commission
  • REPowerEU

Data Act: ‘So much clarity that no lawyer is needed’

Similar to the General Data Protection Regulation (GDPR), the Data Act is seen as highly controversial in the industry. Alena Kühlein (DIHK), Sicco Lehmann-Brauns (Siemens) and MEP Damian Boeselager (Greens/EFA) discussed some critical points in Europe.Table’s first live briefing this year. All three see the great opportunities that lie in a thriving data market. Among other things, they recognize risks in the many ambiguities and exemption rules. There is still time to make adjustments.

In view of the rapidly growing volume of data in connected devices and machines (Internet of Things, Industrial Internet of Things), companies also see growing potential to derive added value from this data. “However, we observe that this potential is far from being fully exploited,” said Alena Kühlein, Head of the Digital Economy Unit at DIHK, in the Table.Live briefing.

DIHK: Companies complain about great uncertainty

A key barrier is legal uncertainty. “Companies feel thwarted because it’s not clear to them what data they can and cannot share.” The Data Act must therefore lead to more security and not create more confusion.

A second important issue, she said, is the dependence of smaller companies, in particular, on individual external providers, such as cloud service providers. “Companies are increasingly reporting the problem of lock-in effects,” Kühlein explained. “These are some of the challenges that the Data Act addresses. We hope to see clear rules on data access to reduce uncertainty and better solutions for cloud switching.”

Siemens calls for an open, modular ecosystem

The enormous potential of data use was also emphasized by Sicco Lehmann-Brauns, Senior Director of Research and Innovation Policy at Siemens. As examples, he cited the possibilities for increasing productivity and efficiency, optimizing the use of resources, and thus also achieving a positive effect on the environment. Like Kühlein, he also sees the opportunity for new business models.

The “as a service” theme is a very important approach for Siemens, said Lehmann-Brauns. “It’s a way for us to be more responsive to customer needs.” In addition to a piece of hardware – a train, for example – Siemens can sell a service – in this case, a mobility promise, he said. “But that only works if there is also added value for everyone involved in the value creation,” Lehmann-Brauns said. “I think that’s the direction we’re moving in right now. I see a lot of opportunities there for Germany and Europe as a business location.”

In the industrial sector, in contrast to the consumer Internet, Europe, with its know-how, certainly has the chance to set standards. “Whether we can leverage the potential in industrial applications will ultimately determine whether we can maintain – and perhaps even expand – our competitiveness in the future,” said Lehmann-Brauns. Three points are important for Siemens, he said:

  • The creation of an open, modular ecosystem,
  • with a strong focus on interoperability across industry sectors,
  • as well as with a strong focus on cloud edge connectivity.

The yardstick for regulation must be whether it helps build such an open ecosystem in Germany and Europe and leverage the data economy, Lehmann-Brauns said.

Boeselager: Everyone must know what they can and cannot do

European Parliament member Damian Boeselager explained that from his perspective, the most important thing about the Data Act is to clearly clarify the roles of all parties involved: What rights and obligations does a producer have, and what rights and obligations does a user or service provider have? The Commission introduced the concept of a data holder, he said. “To me, the term data operator would better describe the role,” Boeselager said. “The goal must be to create the basic requirement that everyone in the value chain knows what data they are allowed to put on the data market and what data they are not allowed to put on the data market. It needs to be so clear that it doesn’t require a lawyer.”

The negotiations in the lead industry committee are still in full swing, Boeselager said. It is a complex discussion in terms of content, he said. “I hope we can get away with separating the purchase contract and the subsequent service contract,” he said. “Then it will also be clearer what data we’re talking about and how the owner of a device is allowed to share it.” There is still a “need for sharpening as far as the definition of user is concerned and the rights you have as an owner,” Boeselager said.

And he agreed with Alena Kühlein of the DIHK, who lamented the many exemptions. “When I write horizontal regulations, it doesn’t make sense to make too many exceptions,” Boeselager said. “Then it’s better to rethink the principle than to discuss individual product classes.”

Here’s what’s next: dates

While negotiations are still in full swing in the lead Industry Committee (ITRE), the first votes will already take place today, Tuesday:

  • Jan. 24: The Internal Market Committee (IMCO) decides on the opinion of its rapporteur Adam Bielan (ECR). The committee focuses on the issue of changing the cloud provider.
  • Jan. 24: The Legal Affairs Committee (JURI) votes on the amendments, which focus mainly on the issue of trade secrets. The rapporteur is Ibán García del Blanco (S&D).
  • Jan. 30: The LIBE Committee is due to vote, focusing mainly on the issue of data protection. Rapporteur is Sergey Lagodinsky (Greens/EFA).
  • Feb. 9: ITRE vote. Rapporteur is Pilar del Castillo Vera (EPP).
  • March 13: vote in plenum.
  • Data Act
  • Data Policy
  • Data protection
  • GDPR

Spain: Sánchez comes under pressure in election year

Spain’s Prime Minister Pedro Sánchez is coming under massive pressure at the start of a year that includes regional and parliamentary elections. Several tens of thousands of people demonstrated against the government in Madrid on Saturday. The protests have been brewing for months and are a reaction to the concessions Sánchez has made to his political partners – the Catalan separatists, nationalists from various regions and the left-wing Podemos party.

Public resentment is based mainly on the fact that Sánchez abolished the criminal offense of sedition in December. This was the main reason for the conviction of nine Catalan separatist leaders for their role in the region’s 2017 failed independence attempt. About a hundred associations and groups had called for Saturday’s demonstration, which was attended by 30,000 people, according to the government, and half a million people, according to the organizers.

Support for controversial parties

The demonstrators opposed a “government of dark pacts.” It is an allusion to Sánchez’s alliance with parties such as the Catalan Esquerra Republicana de Catalunya (ERC) and Euskal Herria Bildu (EH Bildu), an amalgamation of left-wing Basque nationalist parties that are crucial to the socialist’s hold on power.

While the attention of Spaniards was focused on the winning numbers of the traditional Christmas lottery, the Senate approved the urgent reform of the Penal Code on Dec. 22, which repealed the offense of incitement of the people and mitigated the offense of embezzlement. The reform affects the two offenses for which the separatist leaders who called for the referendum on self-determination for Catalonia in October 2017 were convicted. It significantly lowers the legal penalties. Protesters believe Sánchez has broken his promises to fight corruption and bring about democratic renewal.

Law with serious flaws

Moreover, the opposition has been demanding the resignation of Equality Minister Irene Montero (Podemos) since November. The new “only yes is yes” law, which took effect in October 2022, has already resulted in reduced prison sentences for more than 250 sex offenders. The opposition had warned of relevant loopholes in the law during the drafting process, but Montero had ignored the objections.

Sánchez and his cabinet are backing the minister. Last week, the government refused to revise the text of the law, saying it would “focus on protecting the victims.” Moreno is the partner of Pablo Iglesias, the former Podemos leader and former vice president of the Sánchez government. Sánchez cannot afford a confrontation with one of his main government partners.

Political U-turn

Many Spaniards particularly resent Sánchez’s political U-turns. In order to form a government in January 2020, Sánchez had to give in to the demands of Pablo Iglesias and the Catalan separatists. Yet only a few months earlier he had categorically stated that he “would not sleep at night” if he governed with Podemos ministers. Previously, he had stated that several of the candidates proposed by Iglesias lacked leadership experience in public office. This is precisely the case with Equality Minister Montero.

The opposition and the public have also criticized the way Sánchez has tried to fill state institutions with sympathizers or members of his party. In January 2020, he appointed his former justice minister, Dolores Delgado, as attorney general. The appointment serves Sánchez’s goal of decriminalizing the separatist process. Sánchez’s most controversial appointments also include those of Juan Carlos Campo and Laura Díez as judges of the Constitutional Court.

Party friend responsible for election polls

Another problematic personnel matter was the appointment of Sánchez’s party colleague José Félix Tezanos as president of the Centro de Investigaciones Sociológicas (CIS) – the organization responsible for the election polls. Sánchez appointed him shortly after becoming Prime Minister.

With the exception of the Tezanos polls, which see the Socialist Party in the majority ahead of the conservative People’s Party (PP), the surveys indicate that the PP could win the parliamentary elections scheduled for the end of the year. However, the PP would need the support of the far-right Vox party to govern. Spain also holds municipal elections in May, which are likely to provide a snapshot of the political climate in the country.

  • Spain

Events

Jan. 26, 2023; 9 a.m.-5 p.m., Brussels (Belgium)
ENISA, Conference Cybersecurity Policy Conference
The European Union Agency for Cybersecurity (ENISA) brings together policymakers, industry representatives and key stakeholders to discuss implementation of cybersecurity policy and challenges ahead. INFO & REGISTRATION

Jan. 26, 2023; 9:30 a.m.-4 p.m., Brussels (Belgium)
Eurogas, Conference Towards A Just Transition For The Gas Sector And Its Workers: Challenges And Opportunities
Eurogas gathers high-level speakers from the industry, unions and institutions to address the uncertainties for the current and future workforce in the gas sector in the context of the energy transition. INFO & REGISTRATION

News

Renewables: EU regulation becomes German law

The European Emergency Ordinance for a faster expansion of power grids and renewable energies is to be implemented into national law by a federal ordinance. The cabinet decision is expected to be made by Feb. 8, after which the Bundestag must still give its approval, announced Economic Affairs Minister Robert Habeck Monday evening at an online event.

The EU regulation was adopted by the energy ministers shortly before Christmas. It allows an environmental impact assessment to be waived for one and a half years if the plants to be built are located in an area for which a strategic environmental assessment has already been carried out. The EU hopes that this will speed up approval procedures. Germany in particular had already pushed for the regulation at the European level. In cases of doubt, it should also be possible to remedy encroachments on species protection after the fact, Habeck said yesterday.

Regarding the necessary capacity of LNG terminals, Habeck also said that he thought it likely that Germany would have to supply gas not only to its immediate neighbors in the future. He mentioned Hungary and “large parts of Ukraine” by name. The International Energy Agency (IEA) had already advocated at the end of last year that the EU should procure gas volumes to supply Ukraine in 2023. ber

  • LNG
  • Natural gas
  • Renewable energies
  • Species protection
  • Ukraine

GIA: Commission wants to simplify broadband expansion

The EU Commission wants to change the rules for broadband expansion. A draft for the Gigabit Infrastructure Act (GIA), which is available to Europe.Table, contains several ideas that pose major challenges for telecommunications companies, home and land owners, and the public sector.

According to the draft, the Commission’s central plans are primarily changes in access rules. It is about rules for:

  • Gigabit network new build projects;
  • access to existing gigabit networks and infrastructure;
  • construction projects in the street and access for co-location projects;
  • the preparation of in-house cabling in new buildings;
  • access for in-house cabling in existing buildings.

The Commission’s draft is likely to offer some potential for dispute. One core element is that not only the lines themselves but also the corresponding infrastructure, such as mobile communications towers, are to be more clearly covered by regulatory requirements in the future. In recent years, these infrastructures were often first outsourced by telecommunications companies and then leased back.

Preconstruction work for in-house fiber optics

In the future, construction work for this infrastructure is also to be brought to the attention of all providers via a central information point. A cooperation obligation is also intended to counter the phenomenon of overbuilding in regulatory terms – i.e., telecommunications providers building a second gigabit infrastructure where fiber optic cables have already been laid.

Articles 8 and 9 of the planned regulation could be of particular relevance for Germany. Under European law, this would result in an obligation for new buildings to be approved one year after entry into force. They would have to include construction inputs for in-house fiber optics.

Access obligation for third parties

An access point will be mandatory for multi-family buildings, and the same applies to conversions of multi-family buildings requiring approval. For single-family houses, however, the regulation is not to become mandatory and the obligation in the other cases is to be subject to a proportionality test.

Another of the Commission’s plans is a piquant one for Germany as a tenant country: Article 9 stipulates that operators of in-house cabling – in Germany, these are usually cable providers – should, in principle, be subject to an access obligation for third parties if a parallel infrastructure is technically impossible or economically unfeasible.

However, operators can refuse shared use if the shared user does not want to accept an offer that meets the GIA’s criteria (fair, reasonable and non-discriminatory). It is just one of many points in the draft GIA that promises a lot of work for regulators. fst

  • Gigabit Infrastructure Act

Federal Cartel Office initiates proceedings against PayPal

The German Federal Cartel Office is taking aim at the PayPal payment service. The competition watchdogs in Bonn initiated proceedings against the European subsidiary to investigate whether PayPal is exploiting a dominant position in Germany and thus impeding competition.

As the Cartel Office announced on Monday, the specific issue is PayPal’s terms of use, according to which merchants are not allowed to offer their goods and services at lower prices if consumers choose a cheaper payment method than PayPal for payment. According to market studies, PayPal is one of the most expensive online payment services in Germany. No statement was initially available from the company.

Higher costs for consumers

“We will now examine what market power PayPal has and to what extent online merchants are dependent on offering PayPal as a payment method,” said Cartel Office chief Andreas Mundt. “If merchants are prevented from taking into account the different high costs of the various payment methods via corresponding surcharges or discounts, other and new payment methods will have a harder time competing on price and quality,” Mundt continued. Consumers would then also suffer, as they would have to pay higher costs indirectly via product prices.

The Cartel Office has its eye on the booming Internet economy in order to safeguard competition in this area. In January 2021, the legislature gave the Cartel Office new instruments for this purpose. Among others, the Bonn-based agency is also scrutinizing Google, Amazon and Facebook. rtr/sas

  • Competition
  • Digitization
  • Federal Cartel Office
  • PayPal

EU states to finance more weapons for Ukraine

A further €500 million in EU funds are to be made available for the supply of weapons and equipment to the Ukrainian armed forces. The foreign ministers of the 27 EU states reached a political agreement on this in Brussels on Monday, as EU Foreign Affairs and Security Policy Representative Josep Borrell announced in the evening. According to him, it also provides for an additional €45 million to be made available for the new EU training mission for Ukrainian armed forces.

So far, the EU has approved arms and equipment deliveries of six times €500 million each for Ukraine’s defensive struggle against the Russian invasion – for a total of €3 billion. The money comes from the so-called European Peace Facility – a new EU financing instrument that can be used to strengthen armed forces in partner countries.

A financial ceiling of €5 billion (at 2018 prices) was originally applied, but this was most recently increased by €2 billion in December. A further increase of €3.5 billion is expected by 2027. According to the German government, Germany is financing around a quarter of the funds.

Since, according to Borrell, Monday’s understanding was only a political agreement in principle, a formal decision is still pending. It is expected in the course of the next few weeks. dpa

  • European policy
  • Ukraine

Opinion

Europe’s Single Market – turning 30 and still going strong

By Andreas Schwab
Ohne Binnenmarkt kein Europa: Andreas Schwab ist Sprecher der EVP im Binnenmarktausschuss und Berichterstatter für den Digital Markets Act.
Andreas Schwab is the internal market policy spokesman of the EPP Group.

The history of the Single Market is remarkable: after crippling stagflation in the early 1980s, the Single European Act in 1987 and then the Maastricht Treaty gave the EU’s economic integration a new impetus. Since then, the Single Market has harmonized hundreds of pieces of product legislation and has set minimum standards in consumer protection for all European citizens. Over the last 15 years, the Single Market has been a key tool in making the EU a global leader in digital regulation.

From a fragmented past, the Single Market united Europe. By opening access to goods, services, jobs, business opportunities and cultural richness across the whole continent, it generated prosperity and became a guarantor of new freedoms.

Nevertheless, in the face of Russia’s war against Ukraine and geo-economic tensions, prosperity and freedom can no longer be taken for granted. Moreover, given the United States’ protectionist push to subsidize domestic industries, it is all the more important to keep the Single Market open, to decrease barriers and to foster seamless trade and thus, increase its attractiveness to investors and citizens alike.

Boost for AI and energy markets

Therefore, it is paramount to deepen the Single Market’s integration over the next decade. The benefits of the Single Market for goods for the 440 million European citizens are clear. Consumers can now enjoy more products than ever from all over the EU! On top of that, buying products from whichever EU country you wish has become more easy and citizens can trust that safety standards are the same everywhere.

Moreover, only together, in the Single Market, were we able to ensure that the same standards apply online and offline. Our new digital rules, the Digital Markets Act and the Digital Services Act are a milestone for a new digital economy, with safer online platforms and better online experiences for consumers as well as fair competition on the merits online for businesses. The era of the digital ‘wild west’ has ended.

Only Europe could do this! This is what we, the EPP Group, have fought for over the past decade and will now see to have thoroughly enforced over the next ten years! Now, more work must be done to ensure that data-driven business models, quantum computing, Artificial Intelligence and energy markets can benefit from the power of a frictionless Single Market for the EU to become a global leader.

Emergency Instrument for the Single Market

The current geopolitical environment is challenging. The COVID-19 pandemic and Russia’s war against Ukraine have brought back some barriers to trade, and Europeans’ freedoms to work or settle in another country have been drastically limited. The EU needs to learn the right lessons and prepare for the next challenge. The upcoming Single Market Emergency Instrument will prevent situations like border closures, like we saw during the pandemic, prepare supply chains for the next hit and ensure that European citizens have equal access to the goods that are needed during a crisis.

Thus, as the EPP Group, we are confident that the answer to the current challenges are more European cooperation and less barriers, with smart rules adapted to a new digital reality. Only together, with a strong economic backbone, can we Europeans exercise our sovereignty.

We fully embrace the challenge of the next decade to not only strengthen the market, but to make sure that every citizen benefits from it. Maybe then, ten years from now, Jacques Delors’ quip will hold a little less true.

  • Artificial intelligence
  • Digital Services Act
  • EU-Binnenmarkt
  • European policy
  • IMCO
  • Single Market

Europe.Table Editorial Office

EUROPE.TABLE EDITORS

Licenses:
    • Commission consults on electricity market reform
    • Data Act: ‘So much clarity that no lawyer is needed’
    • Spain: Sánchez comes under pressure in election year
    • Renewables: EU regulation becomes German law
    • Gigabit Plan: Commission wants to simplify broadband expansion
    • German Federal Cartel Office initiates proceedings against PayPal
    • EU states to finance more weapons for Ukraine
    • Opinion: Europe’s Single Market – turning 30 and still going strong
    Dear reader,

    For some of the ideas for the electricity market reform, there will probably not be enough time until the end of the legislative period, as the EU Commission itself admits. But the remaining proposals would also be a huge undertaking. Christian Ehler, coordinator of the EPP in ITRE, already warns against sky-high expectations. Manuel Berkel has read the 27 pages of the Commission’s consultation on electricity market design and summarizes the most important points.

    A flourishing data market holds great opportunities – but legal uncertainty has so far been a major obstacle for companies, said Alena Kühlein, Head of the Digital Economy Unit at DIHK, in yesterday’s Table.Live briefing. She, therefore, wants more security from the Data Act, not more confusion. Corinna Visser also heard from Sicco Lehmann-Brauns from Siemens and MEP Damian Boeselager (Greens/EFA) about the demands made on the Data Act during the discussion.

    Tens of thousands took to the streets in Madrid on the weekend to demonstrate against the policies of Prime Minister Pedro Sánchez. At the beginning of a year in which Spain is holding regional and parliamentary elections, the head of government is under pressure. He is accused of forming alliances with separatists in Catalonia and other regions. And that is not his government’s only problem, as Isabel Cuesta reports.

    If you like Europe.Table, please forward us. If you have been sent this email: Here you can test this and many other briefings for free.

    Your
    Sarah Schaefer
    Image of Sarah  Schaefer

    Feature

    Commission consults on electricity market reform

    The consultation on electricity market reform has not been slim. The Commission sets out its ideas on 27 pages. For some topics, however, the authority itself admits that they will probably not be implementable by the end of the legislative period. “Some of these challenges will require further policy consideration beyond the scope of the current reform,” the Commission writes, citing capacity mechanisms and local price signals as examples. However, even the rest would be a mammoth program.

    In its logic, the consultation largely follows the Commission’s four-part non-paper from mid-December. What consumers pay for electricity should no longer depend so much on the short-term costs of fossil energies. The most critical point would be retroactive interventions in the remuneration of existing plants. The member states had only agreed to skim off exceptionally high revenues as a temporary crisis measure. As announced in the non-paper, the Commission is asking whether the rules on revenue absorption should be extended so that they can be reactivated, for example, in the event of further crises.

    Possible risk for investors

    However, the Commission is also discussing more structural interventions for existing plants:

    • “Stronger incentives” for generators to market some of their existing capacity through long-term power purchase agreements (PPAs);
    • Member states could be given the right to voluntarily open tenders for renewables to existing plants and remunerate them through two-way contracts for difference (two-way CfDs);
    • However, member states could also be given the option to retroactively force existing plants into CfDs and re-determine the remuneration.

    Regarding the last option, however, the Commission warns of uncertainty for investors seeking to develop renewable energy: “This could jeopardize the risk for the necessary investments in this type of electricity generation, increase the cost of these investments and thus be counterproductive.” In addition, the move could conflict with Article 6 of the Renewable Energy Directive (RED).

    Long-term electricity trading

    Like Eurelectric, the Commission sees the strengthening of long-term power trading as a way to shield consumers from short-term price spikes. With REPowerEU, the Commission showed member states several ways to support the market penetration of long-term PPAs in May 2022.

    One goal is still current: SMEs and not just energy-intensive, large industrial companies should also be able to hedge more easily against strong fluctuations in electricity prices – for example, through government loan guarantees for and pooling of PPAs. In the consultation, the Commission now mentions another possibility: obliging energy suppliers and large industrial companies to procure part of their portfolios via PPAs.

    In the case of contracts for differences, it is striking that the Commission always asks whether rules for CfDs should be technology-specific, which would, for example, allow special rules for more expensive nuclear power or bioenergy. The agency also asks about the impact of more support via CfDs on the more market-based instrument of PPAs. In an interview with Europe.Table, Eurelectric Secretary General Kristian Ruby had already pointed out that long-term markets are not very liquid, partly because many European countries already remunerate renewables via contracts for difference.

    Renewables are also a topic

    Surprisingly, the consultation also includes a short section on renewables – new input for the ongoing trialogue on the RED was not actually announced. The Commission specifically asks for a connection guarantee for hybrid offshore wind farms that want to feed electricity into the grids of two member states. Another topic is investment in the power grids and possible adjustments to grid charges. Eon CEO Leonhard Birnbaum announced only last week that as Eurelectric president he wanted to push for this in view of increased interest rates.

    As announced in the non-paper, the consultation also includes sections for an amendment to market supervision and the corresponding REMIT regulation for improved consumer protection and for fine-tuning the short-term markets. Under the last point, in particular, the Commission has assembled a hodgepodge of proposals that read more like work orders to various units and directorates general for the next legislature.

    These range from submetering in metering to a new peak-shaving product for grid operators to adjustments in emissions trading that could incentivize more flexibility in the electricity market.

    Ehler: deep intervention not realistic

    The catalog of tasks for regulating the end-customer markets is also extremely ambitious – from energy sharing and harmonized rules for substitute supply to the permanent possibility of state-regulated prices.

    One experienced negotiator in parliament is already warning against expecting too much. “A promise to citizens to massively reduce prices with a few simple interventions in the electricity market would probably end up as a pipe burst,” says CDU MEP Christian Ehler, EPP coordinator in ITRE.

    The main reasons, he said, were the shortage of time and the different interests in the Council. “I think new rules for contracts for differences are feasible. However, it is not realistic to achieve far-reaching intervention in the electricity market by the end of the legislative period,” Ehler told Europe.Table last week.

    • EU
    • European Commission
    • REPowerEU

    Data Act: ‘So much clarity that no lawyer is needed’

    Similar to the General Data Protection Regulation (GDPR), the Data Act is seen as highly controversial in the industry. Alena Kühlein (DIHK), Sicco Lehmann-Brauns (Siemens) and MEP Damian Boeselager (Greens/EFA) discussed some critical points in Europe.Table’s first live briefing this year. All three see the great opportunities that lie in a thriving data market. Among other things, they recognize risks in the many ambiguities and exemption rules. There is still time to make adjustments.

    In view of the rapidly growing volume of data in connected devices and machines (Internet of Things, Industrial Internet of Things), companies also see growing potential to derive added value from this data. “However, we observe that this potential is far from being fully exploited,” said Alena Kühlein, Head of the Digital Economy Unit at DIHK, in the Table.Live briefing.

    DIHK: Companies complain about great uncertainty

    A key barrier is legal uncertainty. “Companies feel thwarted because it’s not clear to them what data they can and cannot share.” The Data Act must therefore lead to more security and not create more confusion.

    A second important issue, she said, is the dependence of smaller companies, in particular, on individual external providers, such as cloud service providers. “Companies are increasingly reporting the problem of lock-in effects,” Kühlein explained. “These are some of the challenges that the Data Act addresses. We hope to see clear rules on data access to reduce uncertainty and better solutions for cloud switching.”

    Siemens calls for an open, modular ecosystem

    The enormous potential of data use was also emphasized by Sicco Lehmann-Brauns, Senior Director of Research and Innovation Policy at Siemens. As examples, he cited the possibilities for increasing productivity and efficiency, optimizing the use of resources, and thus also achieving a positive effect on the environment. Like Kühlein, he also sees the opportunity for new business models.

    The “as a service” theme is a very important approach for Siemens, said Lehmann-Brauns. “It’s a way for us to be more responsive to customer needs.” In addition to a piece of hardware – a train, for example – Siemens can sell a service – in this case, a mobility promise, he said. “But that only works if there is also added value for everyone involved in the value creation,” Lehmann-Brauns said. “I think that’s the direction we’re moving in right now. I see a lot of opportunities there for Germany and Europe as a business location.”

    In the industrial sector, in contrast to the consumer Internet, Europe, with its know-how, certainly has the chance to set standards. “Whether we can leverage the potential in industrial applications will ultimately determine whether we can maintain – and perhaps even expand – our competitiveness in the future,” said Lehmann-Brauns. Three points are important for Siemens, he said:

    • The creation of an open, modular ecosystem,
    • with a strong focus on interoperability across industry sectors,
    • as well as with a strong focus on cloud edge connectivity.

    The yardstick for regulation must be whether it helps build such an open ecosystem in Germany and Europe and leverage the data economy, Lehmann-Brauns said.

    Boeselager: Everyone must know what they can and cannot do

    European Parliament member Damian Boeselager explained that from his perspective, the most important thing about the Data Act is to clearly clarify the roles of all parties involved: What rights and obligations does a producer have, and what rights and obligations does a user or service provider have? The Commission introduced the concept of a data holder, he said. “To me, the term data operator would better describe the role,” Boeselager said. “The goal must be to create the basic requirement that everyone in the value chain knows what data they are allowed to put on the data market and what data they are not allowed to put on the data market. It needs to be so clear that it doesn’t require a lawyer.”

    The negotiations in the lead industry committee are still in full swing, Boeselager said. It is a complex discussion in terms of content, he said. “I hope we can get away with separating the purchase contract and the subsequent service contract,” he said. “Then it will also be clearer what data we’re talking about and how the owner of a device is allowed to share it.” There is still a “need for sharpening as far as the definition of user is concerned and the rights you have as an owner,” Boeselager said.

    And he agreed with Alena Kühlein of the DIHK, who lamented the many exemptions. “When I write horizontal regulations, it doesn’t make sense to make too many exceptions,” Boeselager said. “Then it’s better to rethink the principle than to discuss individual product classes.”

    Here’s what’s next: dates

    While negotiations are still in full swing in the lead Industry Committee (ITRE), the first votes will already take place today, Tuesday:

    • Jan. 24: The Internal Market Committee (IMCO) decides on the opinion of its rapporteur Adam Bielan (ECR). The committee focuses on the issue of changing the cloud provider.
    • Jan. 24: The Legal Affairs Committee (JURI) votes on the amendments, which focus mainly on the issue of trade secrets. The rapporteur is Ibán García del Blanco (S&D).
    • Jan. 30: The LIBE Committee is due to vote, focusing mainly on the issue of data protection. Rapporteur is Sergey Lagodinsky (Greens/EFA).
    • Feb. 9: ITRE vote. Rapporteur is Pilar del Castillo Vera (EPP).
    • March 13: vote in plenum.
    • Data Act
    • Data Policy
    • Data protection
    • GDPR

    Spain: Sánchez comes under pressure in election year

    Spain’s Prime Minister Pedro Sánchez is coming under massive pressure at the start of a year that includes regional and parliamentary elections. Several tens of thousands of people demonstrated against the government in Madrid on Saturday. The protests have been brewing for months and are a reaction to the concessions Sánchez has made to his political partners – the Catalan separatists, nationalists from various regions and the left-wing Podemos party.

    Public resentment is based mainly on the fact that Sánchez abolished the criminal offense of sedition in December. This was the main reason for the conviction of nine Catalan separatist leaders for their role in the region’s 2017 failed independence attempt. About a hundred associations and groups had called for Saturday’s demonstration, which was attended by 30,000 people, according to the government, and half a million people, according to the organizers.

    Support for controversial parties

    The demonstrators opposed a “government of dark pacts.” It is an allusion to Sánchez’s alliance with parties such as the Catalan Esquerra Republicana de Catalunya (ERC) and Euskal Herria Bildu (EH Bildu), an amalgamation of left-wing Basque nationalist parties that are crucial to the socialist’s hold on power.

    While the attention of Spaniards was focused on the winning numbers of the traditional Christmas lottery, the Senate approved the urgent reform of the Penal Code on Dec. 22, which repealed the offense of incitement of the people and mitigated the offense of embezzlement. The reform affects the two offenses for which the separatist leaders who called for the referendum on self-determination for Catalonia in October 2017 were convicted. It significantly lowers the legal penalties. Protesters believe Sánchez has broken his promises to fight corruption and bring about democratic renewal.

    Law with serious flaws

    Moreover, the opposition has been demanding the resignation of Equality Minister Irene Montero (Podemos) since November. The new “only yes is yes” law, which took effect in October 2022, has already resulted in reduced prison sentences for more than 250 sex offenders. The opposition had warned of relevant loopholes in the law during the drafting process, but Montero had ignored the objections.

    Sánchez and his cabinet are backing the minister. Last week, the government refused to revise the text of the law, saying it would “focus on protecting the victims.” Moreno is the partner of Pablo Iglesias, the former Podemos leader and former vice president of the Sánchez government. Sánchez cannot afford a confrontation with one of his main government partners.

    Political U-turn

    Many Spaniards particularly resent Sánchez’s political U-turns. In order to form a government in January 2020, Sánchez had to give in to the demands of Pablo Iglesias and the Catalan separatists. Yet only a few months earlier he had categorically stated that he “would not sleep at night” if he governed with Podemos ministers. Previously, he had stated that several of the candidates proposed by Iglesias lacked leadership experience in public office. This is precisely the case with Equality Minister Montero.

    The opposition and the public have also criticized the way Sánchez has tried to fill state institutions with sympathizers or members of his party. In January 2020, he appointed his former justice minister, Dolores Delgado, as attorney general. The appointment serves Sánchez’s goal of decriminalizing the separatist process. Sánchez’s most controversial appointments also include those of Juan Carlos Campo and Laura Díez as judges of the Constitutional Court.

    Party friend responsible for election polls

    Another problematic personnel matter was the appointment of Sánchez’s party colleague José Félix Tezanos as president of the Centro de Investigaciones Sociológicas (CIS) – the organization responsible for the election polls. Sánchez appointed him shortly after becoming Prime Minister.

    With the exception of the Tezanos polls, which see the Socialist Party in the majority ahead of the conservative People’s Party (PP), the surveys indicate that the PP could win the parliamentary elections scheduled for the end of the year. However, the PP would need the support of the far-right Vox party to govern. Spain also holds municipal elections in May, which are likely to provide a snapshot of the political climate in the country.

    • Spain

    Events

    Jan. 26, 2023; 9 a.m.-5 p.m., Brussels (Belgium)
    ENISA, Conference Cybersecurity Policy Conference
    The European Union Agency for Cybersecurity (ENISA) brings together policymakers, industry representatives and key stakeholders to discuss implementation of cybersecurity policy and challenges ahead. INFO & REGISTRATION

    Jan. 26, 2023; 9:30 a.m.-4 p.m., Brussels (Belgium)
    Eurogas, Conference Towards A Just Transition For The Gas Sector And Its Workers: Challenges And Opportunities
    Eurogas gathers high-level speakers from the industry, unions and institutions to address the uncertainties for the current and future workforce in the gas sector in the context of the energy transition. INFO & REGISTRATION

    News

    Renewables: EU regulation becomes German law

    The European Emergency Ordinance for a faster expansion of power grids and renewable energies is to be implemented into national law by a federal ordinance. The cabinet decision is expected to be made by Feb. 8, after which the Bundestag must still give its approval, announced Economic Affairs Minister Robert Habeck Monday evening at an online event.

    The EU regulation was adopted by the energy ministers shortly before Christmas. It allows an environmental impact assessment to be waived for one and a half years if the plants to be built are located in an area for which a strategic environmental assessment has already been carried out. The EU hopes that this will speed up approval procedures. Germany in particular had already pushed for the regulation at the European level. In cases of doubt, it should also be possible to remedy encroachments on species protection after the fact, Habeck said yesterday.

    Regarding the necessary capacity of LNG terminals, Habeck also said that he thought it likely that Germany would have to supply gas not only to its immediate neighbors in the future. He mentioned Hungary and “large parts of Ukraine” by name. The International Energy Agency (IEA) had already advocated at the end of last year that the EU should procure gas volumes to supply Ukraine in 2023. ber

    • LNG
    • Natural gas
    • Renewable energies
    • Species protection
    • Ukraine

    GIA: Commission wants to simplify broadband expansion

    The EU Commission wants to change the rules for broadband expansion. A draft for the Gigabit Infrastructure Act (GIA), which is available to Europe.Table, contains several ideas that pose major challenges for telecommunications companies, home and land owners, and the public sector.

    According to the draft, the Commission’s central plans are primarily changes in access rules. It is about rules for:

    • Gigabit network new build projects;
    • access to existing gigabit networks and infrastructure;
    • construction projects in the street and access for co-location projects;
    • the preparation of in-house cabling in new buildings;
    • access for in-house cabling in existing buildings.

    The Commission’s draft is likely to offer some potential for dispute. One core element is that not only the lines themselves but also the corresponding infrastructure, such as mobile communications towers, are to be more clearly covered by regulatory requirements in the future. In recent years, these infrastructures were often first outsourced by telecommunications companies and then leased back.

    Preconstruction work for in-house fiber optics

    In the future, construction work for this infrastructure is also to be brought to the attention of all providers via a central information point. A cooperation obligation is also intended to counter the phenomenon of overbuilding in regulatory terms – i.e., telecommunications providers building a second gigabit infrastructure where fiber optic cables have already been laid.

    Articles 8 and 9 of the planned regulation could be of particular relevance for Germany. Under European law, this would result in an obligation for new buildings to be approved one year after entry into force. They would have to include construction inputs for in-house fiber optics.

    Access obligation for third parties

    An access point will be mandatory for multi-family buildings, and the same applies to conversions of multi-family buildings requiring approval. For single-family houses, however, the regulation is not to become mandatory and the obligation in the other cases is to be subject to a proportionality test.

    Another of the Commission’s plans is a piquant one for Germany as a tenant country: Article 9 stipulates that operators of in-house cabling – in Germany, these are usually cable providers – should, in principle, be subject to an access obligation for third parties if a parallel infrastructure is technically impossible or economically unfeasible.

    However, operators can refuse shared use if the shared user does not want to accept an offer that meets the GIA’s criteria (fair, reasonable and non-discriminatory). It is just one of many points in the draft GIA that promises a lot of work for regulators. fst

    • Gigabit Infrastructure Act

    Federal Cartel Office initiates proceedings against PayPal

    The German Federal Cartel Office is taking aim at the PayPal payment service. The competition watchdogs in Bonn initiated proceedings against the European subsidiary to investigate whether PayPal is exploiting a dominant position in Germany and thus impeding competition.

    As the Cartel Office announced on Monday, the specific issue is PayPal’s terms of use, according to which merchants are not allowed to offer their goods and services at lower prices if consumers choose a cheaper payment method than PayPal for payment. According to market studies, PayPal is one of the most expensive online payment services in Germany. No statement was initially available from the company.

    Higher costs for consumers

    “We will now examine what market power PayPal has and to what extent online merchants are dependent on offering PayPal as a payment method,” said Cartel Office chief Andreas Mundt. “If merchants are prevented from taking into account the different high costs of the various payment methods via corresponding surcharges or discounts, other and new payment methods will have a harder time competing on price and quality,” Mundt continued. Consumers would then also suffer, as they would have to pay higher costs indirectly via product prices.

    The Cartel Office has its eye on the booming Internet economy in order to safeguard competition in this area. In January 2021, the legislature gave the Cartel Office new instruments for this purpose. Among others, the Bonn-based agency is also scrutinizing Google, Amazon and Facebook. rtr/sas

    • Competition
    • Digitization
    • Federal Cartel Office
    • PayPal

    EU states to finance more weapons for Ukraine

    A further €500 million in EU funds are to be made available for the supply of weapons and equipment to the Ukrainian armed forces. The foreign ministers of the 27 EU states reached a political agreement on this in Brussels on Monday, as EU Foreign Affairs and Security Policy Representative Josep Borrell announced in the evening. According to him, it also provides for an additional €45 million to be made available for the new EU training mission for Ukrainian armed forces.

    So far, the EU has approved arms and equipment deliveries of six times €500 million each for Ukraine’s defensive struggle against the Russian invasion – for a total of €3 billion. The money comes from the so-called European Peace Facility – a new EU financing instrument that can be used to strengthen armed forces in partner countries.

    A financial ceiling of €5 billion (at 2018 prices) was originally applied, but this was most recently increased by €2 billion in December. A further increase of €3.5 billion is expected by 2027. According to the German government, Germany is financing around a quarter of the funds.

    Since, according to Borrell, Monday’s understanding was only a political agreement in principle, a formal decision is still pending. It is expected in the course of the next few weeks. dpa

    • European policy
    • Ukraine

    Opinion

    Europe’s Single Market – turning 30 and still going strong

    By Andreas Schwab
    Ohne Binnenmarkt kein Europa: Andreas Schwab ist Sprecher der EVP im Binnenmarktausschuss und Berichterstatter für den Digital Markets Act.
    Andreas Schwab is the internal market policy spokesman of the EPP Group.

    The history of the Single Market is remarkable: after crippling stagflation in the early 1980s, the Single European Act in 1987 and then the Maastricht Treaty gave the EU’s economic integration a new impetus. Since then, the Single Market has harmonized hundreds of pieces of product legislation and has set minimum standards in consumer protection for all European citizens. Over the last 15 years, the Single Market has been a key tool in making the EU a global leader in digital regulation.

    From a fragmented past, the Single Market united Europe. By opening access to goods, services, jobs, business opportunities and cultural richness across the whole continent, it generated prosperity and became a guarantor of new freedoms.

    Nevertheless, in the face of Russia’s war against Ukraine and geo-economic tensions, prosperity and freedom can no longer be taken for granted. Moreover, given the United States’ protectionist push to subsidize domestic industries, it is all the more important to keep the Single Market open, to decrease barriers and to foster seamless trade and thus, increase its attractiveness to investors and citizens alike.

    Boost for AI and energy markets

    Therefore, it is paramount to deepen the Single Market’s integration over the next decade. The benefits of the Single Market for goods for the 440 million European citizens are clear. Consumers can now enjoy more products than ever from all over the EU! On top of that, buying products from whichever EU country you wish has become more easy and citizens can trust that safety standards are the same everywhere.

    Moreover, only together, in the Single Market, were we able to ensure that the same standards apply online and offline. Our new digital rules, the Digital Markets Act and the Digital Services Act are a milestone for a new digital economy, with safer online platforms and better online experiences for consumers as well as fair competition on the merits online for businesses. The era of the digital ‘wild west’ has ended.

    Only Europe could do this! This is what we, the EPP Group, have fought for over the past decade and will now see to have thoroughly enforced over the next ten years! Now, more work must be done to ensure that data-driven business models, quantum computing, Artificial Intelligence and energy markets can benefit from the power of a frictionless Single Market for the EU to become a global leader.

    Emergency Instrument for the Single Market

    The current geopolitical environment is challenging. The COVID-19 pandemic and Russia’s war against Ukraine have brought back some barriers to trade, and Europeans’ freedoms to work or settle in another country have been drastically limited. The EU needs to learn the right lessons and prepare for the next challenge. The upcoming Single Market Emergency Instrument will prevent situations like border closures, like we saw during the pandemic, prepare supply chains for the next hit and ensure that European citizens have equal access to the goods that are needed during a crisis.

    Thus, as the EPP Group, we are confident that the answer to the current challenges are more European cooperation and less barriers, with smart rules adapted to a new digital reality. Only together, with a strong economic backbone, can we Europeans exercise our sovereignty.

    We fully embrace the challenge of the next decade to not only strengthen the market, but to make sure that every citizen benefits from it. Maybe then, ten years from now, Jacques Delors’ quip will hold a little less true.

    • Artificial intelligence
    • Digital Services Act
    • EU-Binnenmarkt
    • European policy
    • IMCO
    • Single Market

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