A hotter summer than ever, with “record temperatures” increasing air conditioning usage and therefore energy consumption. Less nuclear production – 29 of the 56 French reactors produce little or no electricity – is renewable due to the lack of water in the swamps and less wind. And the alternative, gas, is more expensive than ever because Russian “energy blackmail”shooter, electricity prices. In short, Europe is a perfect storm which eventually prompted the European Commission to take action to intervene. european electricity market In the crisis, separate the price of electricity and gas with measures to reduce demand (finally) and leverage additional resources to help vulnerable consumers.
At the moment, these are ideas brought together in a preliminary working document that Brussels has tabled for the European Union. emergency meeting EU energy ministers September 9, after a summer filled with “worrying episodes”. Like the one that raised the price of electricity in the Baltic states to 4,000 euros per megawatt hour on the afternoon of August 16. It was a punctual thing. Fear, however, prompted Brussels to devise a response emphasizing mandatory marches. reduce electricity consumption In a coordinated way in the EU, formulas similar to those used to reduce gas demand, especially during peak hours of the day when electricity is more expensive, with incentives for households and compensation for companies that reduce their consumption.
Brussels is also a “certain” price limit for “marginal” technologies other than most renewables, nuclear or low-cost gas such as lignite. The money thus saved can then be used by Member States to finance support programs for consumers, which lowers the final electricity bill through a regulated tariff. However, the introduction of this mechanism would not be compatible with so-called taxes. snow sent from heavenExtraordinary gains of power generation companies that do not have to pay for carbon dioxide (CO2) rights or use gas, which would be eliminated if they chose the price ceiling path. “We can be assured that we will use some of the excess profits that power producers make—which they never expected and cannot reinvest so quickly—to target our support for low-income and vulnerable businesses during these expensive electricity times,” he said. this Friday Commission president Ursula von der Leyen at a meeting of her party in Germany.
Instead, Commission experts cool off other options, such as “Europeanizing” the regulated price system implemented by Greece, forced interventions in retail prices, or subsidies to neutralize the impact of the CO2 emissions trading system on electricity, because if electricity prices are lowered, efforts to reduce consumption are jeopardized. They also do not look favorably on other Member States imitating so-called countries. “Iberian exception”They will “increase gas and electricity demand and threaten the security of electricity supply”, allowing Spain and Portugal to limit the price of gas used for electricity generation and lower the bill.
This is a balance shared by other key players in the industry who feel that the Spanish-Portuguese mechanism is not well designed and does not provide an adequate balance between protecting citizens from energy poverty and maintaining the price signal that shows energy is valuable and that energy is valuable. scarce. “We are currently seeing an increase in the use of gas for electricity in Spain. This is not good. “We need to use less gas for electricity in the coming months and years, and if we replicate this intervention, we won’t get good results,” he thinks. Kristian RubyHe is the general secretary of Eurelectric, the body representing European electricity companies. According to him, separating the gas will not be enough because there are other energy sources like coal that are getting more expensive. In the short term, he argues, the EU should bet on huge energy savings, hold auctions that allow industrial companies to receive compensation for their energy savings, and, above all, be cautious not to dilute the price signal too much.
Community experts are clear that there are no miraculous solutions and that nothing will return prices to pre-crisis levels or take away the significant impacts on inflation, which continued to set records in the Eurozone and rose to 9.1% in August. But they also realize that the situation is escalating to a new dimension. alarming situation and this action is required. When the Spanish Government launched its offensive in September a year ago to convince the rest of its European partners of the need to control gas and electricity prices and reform the electricity market, several countries joined the majority, and most minus the Community Executive.
Other times they ran. The EU focused on getting past the health and economic crisis caused by the covid-19 pandemic and continued to reiterate that the increase in the bill was a temporary problem due to the increase in gas demand from Asia, Russia and Russia’s production cut. an increase in the price of the emissions trading scheme. Everything would be resolved in the spring, they swore. A year later, the European Commission faced reality: prices will continue to be high until 2024 or 2025 and precautions must be taken.
“The electricity market no longer works because there is an actor named Putin who is systematically trying to destroy and manipulate it. We must react to this. The European Commission president announced last week about a move that has so far been blessed even by countries that have been unwilling to reform or intervene. Germany, Austria or the Netherlands. The German company, which is also in favor of imposing a limit on Russian gas coming through the pipeline, will give more details about Brussels’ plans in the coming days. state of the union debate At the plenary meeting in Strasbourg on 14 September, after Member States have clarified their preferences.