electricity oligopoly

In a recent article, he summed up the current injustice of the European electricity sector in a few sentences: “The blades of the wind turbines in the mountain range in front of my window are spinning with a special energy today. Last night’s storm has subsided, but strong winds continue to deliver extra kilowatts to the power grid at absolutely zero extra cost (or marginal cost, as economists call it). But people struggling to make a living during a dire cost-of-living crisis have to pay for those kilowatts as if they were produced by the more expensive liquefied natural gas shipped from Texas to the Greek coast. This nonsense, which reigns far beyond Greece and Europe, must end. The absurdity stems from the misconception that states can simulate a competitive and therefore efficient electricity market. Because a single power cord enters our homes or workplaces, leaving things in the hands of the market will lead to a perfect monopoly, the result that no one wants. But governments have decided they can simulate a competitive market to replace the utilities that once produced and distributed power. But obviously they can’t.”

Primarily in private hands, this “market” (France is the exception in Europe) had to fulfill two contradictory goals: to always guarantee the supply of consumption and to channel investments into green energies. To achieve this, Brussels experts developed two measures: to create another market for greenhouse gas emission permits (the price of the pollutant will be determined by the market) and to introduce a system of marginal cost prices so that the wholesale price of each kilowatt is that of the most expensive kilowatt produced by each generation source.

Thanks to this procedure, for example, the coal-fired generation company will have to pay very high emission permits that will raise the price, thus providing an incentive to abandon coal and switch to natural gas and renewable energy. Likewise, the possibility of charging generation companies for their renewable energies at the most expensive generation price was an incentive to invest in these clean energies.

The facts, however, did not fit the theory, which worked solely within the framework of market stability, on the contrary: the dizzying rise of gas, which tripled its price in a short time, meant that coal was no longer the most popular fuel. was expensive, so they started investing in regeneration through hydrocarbons and natural gas. At the same time, consumer anger began to spread, observing that they had to pay for “cheap” electricity at zero marginal cost (hydroelectric power or energy from renewable sources) thanks to a crazy system. gold… Adjustments to falling profits – cheap production paid for insanely high prices – didn’t fix the problem, but it did complicate the system.

There is no doubt that the market best allocates available resources, and this criterion is accepted by everyone in Europe. But the radical version of this idea is destroying us in the energy market. The SPD wisely determined in Bad Godesberg that social democracy consists in recognizing that the market economy must go as far as possible; and State action, to the extent necessary.

In this case, the market could not gain more advantage from the monopoly of supply, and in any case, it is clear that an intervention is needed to bring order to the chaos. Only five electricity companies in Spain form a fighting oligopoly with little solidarity. At the very least, we will have to justify the gains of our compatriots by choosing this model and not a state monopoly like the French model.