Unlocking the Potential of Long-Term Contracts in the EU Energy Landscape

On 14 December 2023 the European Parliament and the Council reached an agreement on a reform to improve the European Union’s electricity market design within the framework of the 2019 Green Deal. Historically, the Commission has regarded long-term contracts as barriers to energy market liberalization, launching proceedings to terminate them under State aid rules or for abuse of dominant position. However, the European Union (EU) now intends to incentivize the use of long-term contracting in the form of power purchase agreements to advance decarbonisation. This chapter delves into the evolving role of long-term contracting in the EU energy landscape, arguing that competition still has an important role to play in energy markets.