Are contracts-for-differences here to stay?

Organised by

• Robert Schuman Centre for Advanced Studies
• FSR: Florence School of Regulation Energy & Climate

The European energy crisis is dragging on, and voices to reform electricity markets are getting louder. Market reforms are going to be discussed (and potentially already implemented) within the first months of 2023. Reforms may involve changes in pricing rules to eliminate so-called windfall profits and give consumers access to cheap renewables. Leading academics are advocating for hybrid markets that encompass spot markets with marginal pricing as well as mandated long-term fixed-price contracts. The systematic integration of mandated long-term contracts into electricity markets would be the largest change in electricity markets since they were established some twenty years ago. Such long-term contracts can take the form of Contracts-for-Difference, allocated via competitive procurement.

Contracts-for-Differences have been used by governments in the procurement of renewable energy for many years now. But, what are these Contracts-for-Differences precisely? In which form and function do they come on different European markets?

In this FSR Insights event, Lena Kitzing will give an overview of Contracts-for-Differences used for renewable energy procurement, and their role as risk management tool to facilitate financing. Lena will also reflect on how Contracts-for-Difference have never seemed to be intended to stay here for good – the ultimate goal of supporting renewable energies was getting them ‘market-ready’ after all. This raises the question of how the design of Contracts-for-Difference must be rethought so that they can become a permanent part of electricity market design?

Hosts

• Leonardo Meeus | Florence School of Regulation (FSR)
• Lucila de Almeida | FSR & Nova School of Law

Keynote Speaker

• Lena Kitzing | Technical University of Denmark DTU

Discussants

• Pablo Rodillas | Comillas Pontifical University
• Anne Held | Fraunhofer Institute for Systems and Innovation Research ISI

Links:

• Read more here
• Watch the recording