With the position paper on the EU Electrification Action Plan, the signatories wish to recommend certain measures to make the EAP fit-for-purpose for energy-intensive industries and for the electrification of the EU:
1. Deliver electricity costs that boost the international competitiveness of European industry and naturally drive electrification. Although designed as a temporary measure, the Clean Industrial Deal State Aid Framework provides a clear key performance indicator in this regard: 50EUR/MWh. Under current global market conditions, a KPI of 50€/MWh should be a maximum of total electricity costs for industry, not just the wholesale price. The success of the Electrification Action Plan will be assessed against its capacity to bring industrial electricity costs in the EU closer to the 50EUR/MWh threshold – rather than targeting a percentage of electrification.
2. Require suppliers to supply a predefined share of their publicly subsidised production at ‘production cost” to specific industries exposed to international competition, as per Draghi recommendation (Part B, pg. 37), as a matter of priority, while ensuring that it does not revert the market to a pre-liberalised structure.
3. Maintain, enhance and extend to all energy-intensive industries and beyond 2030 the EU-wide implementation of ETS indirect costs compensation in line with the expected protracted role of fossil-fuels as price-setting technologies in wholesale markets. The Commission and Member States must ensure that the addition of new sectors must not have a negative impact on the level of compensation received by the already eligible sectors.
4. Improve the Clean Industrial Deal State Aid Framework (CISAF):
– a. Section 4.5 establishing a Temporary Price Relief for EIIs:
• Remove the restriction of cumulation with ETS indirect costs compensation (each measure addresses distinct roots of high-power costs) and extend its duration beyond 2030 and its eligibility to all CEEAG sectors’ list (including full CEEAG Annex 1).
• Remove the restrictive requirements that aid may cover up to 50% of the market price for 50% of annual electricity use and must not result in a price lower than 50 euros per MWh. Further, remove the requirement that 50% of aid received must be reinvested in decarbonisation.
– b. Section 5 on aid for decarbonization of industry:
• Paragraph 131: Remove the provision that support for the reduction of indirect emissions requires on-site RES generation, as it constitutes a barrier to decarbonization and further electrification and is totally inappropriate for the needs of energy-intensive industries.
• Paragraph 138: the principle limiting the increase in industrial production capacity is going against the stated objectives of the EU’s Critical Raw Materials Act (CRMA) and the RESourceEU Action Plan.
– c. Section 4.3 on aid for non-fossil flexibility support schemes (paragraph 109): The provision placing the cost of non-fossil flexibility support schemes on baseload consumers must be reworked, as baseload industrial consumers, drawing electricity in a stable and predictable manner, are not the ones putting real stress on grid infrastructure.
5. Adopt and finance a targeted mechanism for mitigating the costs associated to the profiling of renewable-PPAs with baseload industrial electricity demand compatible with EU competition law, and expand substantially the budget of the EIB counter-party risk guarantees for industrial PPA off-takers, building on Recommendation 1.b in the Antwerp Dialogue on Industrial Electrification and Competitiveness and a recommendation in the Draghi report (Part B, p. 35)
6. Maximise and utilize available national and European funds to finance the costs of modernizing and expanding EU electricity grids, and implement targeted measures, like specific network tariff regimes for industrial consumers exposed to international carbon leakage, to lower or at least reducing them at a minimum. As part of this, the Alliance encourages and promotes an EU funding approach to investment in cross-border infrastructure as instrumental approach to the creation of a real internal energy market and to ultimately reduce the connection costs for its industrial consumers.
7. Acknowledge the potential but also the limitations of industrial demand-side response from EIIs, preserving inter alia the voluntary nature of any scheme and fair remuneration. Where technically and commercially possible, voluntary industrial demand response projects must be incentivized through investment support and adequate remuneration.
8. Provide robust financial support at EU level for industries to invest in electric technologies and electricity infrastructure upgrades, as it can help overcome the initial high investment costs. The EU should also allow Member States to support OPEX costs of energy intensive companies for the electrification of carbon intensive production processes.
9. Acknowledge the continued need for firm energy capacity and reliable system flexibility to safeguard system adequacy, stability and limit price volatility throughout the electrification transition. This should consider a range of solutions based upon the technology neutrality principle.
The full document is available visiting Cepi.