Scaling up renewable generation, storage, and demand-side flexibility in time to the meet climate neutrality ambition will require enhanced investor certainty to unlock the project pipeline.
After all, there is no time to lose. Aggressive decarbonisation is needed across all sectors to limit global warming and halt the threat of runaway climate change. At the same time, energy security and affordability must be tackled head-on. For that, we must accelerate the energy transition and electrify to cut emissions while bolstering Europe’s energy independence.
Strategic investments in a resilient, decarbonised future are therefore urgently needed – but national budgets, which have been crippled the Covid-19 pandemic, face further pressure amid geopolitical, social, and economic uncertainty. Against this backdrop, unprecedent levels of capital from private investors are needed alongside state funds.
Still, misguided market interventions – such as price caps and “clawback” mechanisms – continue to fuel uncertainty, impacting the long-term price signals, and reducing investors’ ability to fund clean energy.
Indeed, speaking at the Power Summit, Claire Waysand – Executive Vice President of ENGIE – said: “There is ample private capital going into the energy transition. But we need predictability, and clarity of rules. What Members States are doing on interventions have bearings.”
The fourth of our policy actions and recommendations focuses on ‘secure signals, secure investment’ and calls on policymakers to:
- Safeguard, and even deepen, competitive integrated EU electricity markets, as a cornerstone of Europe's security of supply.
- Provide investors with security: ensure predictable, long-term, stable, transparent, and market-based frameworks to reassure about the financial viability of clean and renewables investment. This should notably apply to generation capacities, but also to storage, power-to-X, and demand-side flexibility.
- Guard investor confidence by avoiding distortive market interventions, like price caps and clawback mechanisms.
- Address the challenges caused by extreme price volatility in energy commodities derivatives markets by allowing emergency/temporary funding to provide liquidity facilities to clearing banks.