It is therefore important for EU and national policy mak ers to develop an integrated energy and industry strategy for the development of a full range of lowcarbon and carbonneu tral energy carriers and related energy infrastructure and energy storage in Europe This should include a mark etbased and mark et responsive framework that delivers cost efcient low CO 2 electricity Furthermore a positive regulatory framework for PP As and longterm power contracts would be essential for electrointensive industries Finally it is essential to adequately value the nonferrous metals industry s current and future role in balancing the profle of electricity mark ets More specifcally the following actions can be considered 273 Member S tates could provide longterm guidance when it comes to regulated compo nents of electricity prices The EU should draft multiannual guidelines enabling compensation for indirect EU ET S costs and for renewable energy support scheme This longterm EU guidance could be accompanied by a stable budgetary and regulatory framework at the national level securing compensation for energyintensive players In particular companies that purchase electricity via RE PP As should be entitled to full compensation for indirect EU ET S costs Crossborder PP As should be encouraged by i further developing interconnector ca pacities between Member S tates and maximizing their use and ii ensuring that suit able costcompetitive products are ofered for the longterm allocation of interconnec tor capacities i e for a period of multiple years which is necessary in order to provide certainty to consumers with regard to their ability to actually import the energy Innovative PP As that can better match the needs of electrointensive producers should be supported or at least not be prevented For instance multibuyer PP As where more companies together tak e on a joint contract and multitechnology PP As which mix diferent renewable technologies Both can in theory partially address issues such as high balancing costs e g by mixing complementary load profles or renewable technol ogies Continue the revision of the e xisting renewable energy support schemes and the introduction of mark etbased auction mechanisms for mature and utility scale tech nologies Finally it is beyond doubt that the transition to a decarbonized power system will require large upfront capital investments for e g generation and longdistance transmission Given the nature of such transformative processes it should be further considered to maximise 273 Ibidem obtained a 0 8 TWh baseload supply from wind energy 269 In Belgium Nyrstar secured a 25year PP A contract for solar energy 85 G Whpa Globally the largest industrial renew able energy PP A is one pinned down by the Russian aluminium producer RUS AL 28 TWh hydro 270 R egardless of decreasing levelized cost of energy for solar and wind power renewable en ergy RE PP As can still be quite e xpensive In fact when negotiating the selling price gen erators look at the wholesale mark et price rather than at generation costs as the electricity mark et represents the main alternative opportunity to selling electricity via a PP A This also means that the strik e price in RE PP As includes EU ET S indirect costs as long as such costs are embedded in the wholesale electricity price 271 Furthermore energy suppliers will need to frmup the variable renewable energy generation with other power production to match the fat load from the electrointensive consumer This additional cost can be included in the PP A or alternatively the electrointensive consumer matches possible power shortfalls with other purchasing contracts This e xplains the success of RE PP A s in Norway where variable wind can be easily matched with hydropower which can act as a virtual battery 272 As mentioned in Chapter 5 electrointensive metals production e g aluminium and zinc are already providing ancillary services to the power system e g load shedding tempo rary interruptability and will be able to e xtend these instruments in the future This will be important given that fossil fuel baseload power production will gradually be replaced by renewable electricity hence requiring storage and largescale demand response to balance supply and demand T o have metals producers actively invest and engage it is important to facilitate mark et access and compensation for providing these services Furthermore while demand response services might increase the efciency of the energy system it might lead to less efcient e g temporarily interrupted production of metals at site level Finally more variable demand from electrointensive consumers might lead to higher grid fees by transmission system operators who e xpect fat loads It is hence important to strive for regulatory alignment Building a supportive regulatory framework might also entail changes to current policies which might stand in the way of higher electrifcation or harm electrointensive produc tion This includes indirect costs under the EU ET S which can deter investments in new processes that require high amounts of electricity due to i the lack of certainty with regard to whether compensation mechanisms will actually be applied from year to year and ii the declining maximum aid intensity foreseen in the current guidelines and other regulatory costs related to electricity consumption by nonferrous metals producers across the EU 269 See for e xample Financial Times 2018 270 Irena 2018 271 European Commission 2019b 272 Ibidem MET ALS IN A CLIMA TE NEUTRAL EUROPE A 2050 BL UEPRINT 75