Bringing EU energy and financial markets together for a competitive transition

News Article

Today, former Italian Prime Minister, Enrico Letta presented his report on the future of the EU Single Market to the European Council.

The report - originally commissioned by European leaders during the European Council of 30 June 2023 - is based on year-long consultations with national governments, European institutions, political groups in the European Parliament, non-EU countries sharing the Single Market and all candidate countries for accession.

Eurelectric’s Secretary General Kristian Ruby welcomed the report as

“a timely catalyst for Europe to enhance its international competitiveness and reinforce its position as a leader of the energy transition.”

In alignment with Eurelectric’s priorities for the next legislative mandate, Letta stressed the need to focus on implementing the EU Green Deal. The scale of the challenge is such, however, that the EU must drastically boost its financial support of the energy transition, starting from attracting more private capital.

It’s clear that the energy transition will be primarily driven by private investments. What was not so clear perhaps is that around €300 billion out of €33 trillion of total private savings in EU are diverted abroad due to our fragmentated financial markets. Bringing this money back home requires deeper integration across the finance and energy sectors, and especially their capital markets.

“The next European legislature must fortify the integrity of the Single Market, especially of our capital markets, and solidify Europe's position on the global stage. The key lies in fostering collaboration between the public and private sectors and adopting a balanced approach to funding and regulation.

On funding, the report suggests interesting new ideas which may help leverage additional capital while striking a balance between the need to expand EU-level funding support and enforcing State Aid regulations to maintain a level playing field and prevent unfair competition.” – adds Ruby

Such ideas include the creation of a Savings and Investment Union to fully integrate financial services within the EU, stricter rules on State Aid and the progressive expansion of EU fundings under the guidance of a more involved European Investment Bank.  

The report also emphasises the need to adopt a more European approach to guarantee an effective industrial strategy, building on and further developing the important projects of common European interest (IPCEI) model. This can help alleviate tension between the need to support Europe’s industrial competitiveness and the need for consistent enforcement of Single Market rules to prevent market fragmentation and maintain a level playing field.  


More market integration for clean electrification


With regards to the power sector, the report calls for advanced and seamless cross-border electricity trading to deploy new clean energy generation in a cost-efficient manner, while mitigating the impact of external shocks.

As the EU seeks to develop a power system with a 70% share of variable renewables by 2030, well-interconnected markets are also crucial to minimise costs associated with grid development, storage, flexibility solutions and backup firm capacity.

In this regards, Eurelectric welcomes the roadmaps outlined in the report highlighting the need for deeper integration across finance and energy sectors and devising concrete action to achieve net zero.

“Such integration is crucial to boosting unprecedented investment into future-proofing our network infrastructure while spurring innovation and enhancing our international competitiveness. We hope these roadmaps will serve as strategic guides to strengthen the integrity of our Single Market and secure our position in the global market.” – concludes Ruby.