The European Union is keeping a ceiling of 180 euros per megawatt-hour for joint gas purchases as it leans on collective bargaining to curb price volatility. With 27 member states pursuing a unified approach, competition for scarce resources is curbed and momentum is directed toward financing renewable projects. The extension covers measures through January 2025, reinforcing steps to safeguard energy security and strengthen the market’s resilience amid ongoing market pressures.
Support for this stance comes from EU leadership stressing that the extension of the three emergency tools is essential to address the still fragile energy situation following Russia’s invasion of Ukraine. The aim remains clear: stabilize energy markets, mitigate crisis impacts, and shield citizens from sharp price swings. Teresa Ribera, the Vice President who chairs the most recent energy meeting with Spain at the helm of the rotating EU presidency, articulated the reasoning behind continuing these measures to maintain steady energy supplies.
The market correction mechanism sets a cap at 180 euros per megawatt-hour to prevent extreme gas spikes in the coming months. The rule triggers if the price stays above this threshold for three consecutive days and when the premium over LNG markets is at least 35 euros. In recent months European prices have surged well beyond those seen in other markets, signaling a potential artificial inflation of gas costs.
By preserving this guardrail, Europe aims to temper volatility and avoid a scenario where prices reach unaffordable levels. Analysts note that the Dutch TTF acts as the reference for the longer-term European market, with forecasts around 35 euros per megawatt-hour for the coming year. The mechanism, alongside other protections, could function as an alternative to the Iberian framework designed for Spain and Portugal. The Iberian mechanism is currently under review with a provisional end date of December 31, should authorities decide against extending it beyond that point.
The Iberian mechanism currently sits at 65 euros per megawatt-hour, higher than the 40 euros seen in the initial reference year. In recent discussions, the vice president indicated an intention to extend this measure for another year, though sources in her department have signaled that no final decision has been made yet. Vulnerable consumers are expected to continue receiving targeted protections, while officials assess which measures should stay in place or be adjusted. Ribera also remarked in a recent interview that there is no immediate need to maintain all existing measures without evaluation.
Beyond price caps, EU ministers agreed on the renewal of the joint gas purchases framework and the reliability of reference prices and cross-border gas exchanges for another year, running from December 30, 2022 to December 31, 2024. The agreement, however, includes changes that compel broader participation and the aggregation of gas purchases, reinforcing a collaborative energy market across member states.
On another front, regulators decided to extend the permitting timeline for renewable energy projects. The extended deadline applies to regulations intended to accelerate approvals for projects aimed at reducing dependence on fossil fuels and Russian supplies. The EU Council stated that ministers chose to push several amended provisions of the regulation through to June 30, 2025, noting that these changes go beyond a simple extension. Officials described the move as a step toward stabilizing energy supply while advancing a cleaner energy transition.
In sum, the European energy package reflects a balanced strategy: keep price safeguards in place to shield consumers, preserve market stability, and hasten renewables deployment. The coordinated approach seeks to minimize price shocks and to foster a resilient energy landscape across the continent, even as external factors continue to influence global energy markets.