The winter package: are its objectives always consistent? Policy Brief No. 2017-01, February 2017

On 30 November 2016, the European Commission published a proposal for a reform of energy markets titled 'Clean Energy for all Europeans', better known as the 'Winter Package'. Its aim is to speed up the integration of electricity markets in Europe and to further encourage the use of renewables and the pursuit of energy efficiency, while at the same time placing European consumers at the heart of this project. This Policy Brief sheds light on the Commission's proposal - which runs to no less than 5000 pages - by examining its three major innovations and looking in depth at issues that remain unresolved in terms of pricing. - Putting the consumer at the centre of the policy. In concrete terms, consumers must be able to participate more fully in the functioning of the electricity market, both as self-producers and as contributors to demand-side responses. - Strengthening the governance of grids and markets. National capacity markets must be open to other Member States and to all technologies. The only exception is coal-fired power plants, the most polluting technology, which should be totally eliminated from the capacity markets in the long term. - Improving the integration of renewables. The project puts an end to the priority of access to grids that has benefited renewables so far and recommends the eventual removal of production support mechanisms. - The issue of electricity pricing appears to be inescapable given increasing inputs of decentralized renewable electricity that are destabilising the standard principle of electricity pricing at marginal cost. Alternatives - pricing at average cost or on the basis of capacity - will need to be explored. - The central role of the carbon price and the implications of its insufficiently high level, which penalizes the competitiveness of low-carbon energies, are hidden. The reform of support mechanisms for renewables is no substitute for an ambitious carbon pricing policy. (authors)