EU Set to Intervene in the Electricity Market Amid Soaring Prices
- August 31, 2022
- Posted by: Quatro Strategies
- Category: Legislation
European Commission President von der Leyen said the bloc is working on an emergency intervention in the electricity market as energy prices skyrocket ahead of what would be a difficult winter for Europe. She emphasized that skyrocketing prices have been exposing Europe’s electricity market design limitations. Von der Leyen added that the market was developed under different circumstances and is no longer fit for purpose.
“That is why we, the Commission, are now working on an emergency intervention and a structural reform of the electricity market. We need a new market model for electricity that really functions and brings us back into balance,” von der Leyen said.
EU member states have been discussing setting price caps on natural gas, but some have been reluctant to back such an intervention on energy markets.
Belgian energy minister van der Straeten said last weekend that gas prices in the bloc should be frozen urgently. She added that the link between gas and electricity prices needed to be reformed to prevent future crises.
Germany, where year-ahead power prices have hit astronomic levels in recent days, has both been pushing for a market reform, and open to a price cap on gas.
More EU member states that have previously opposed a market intervention could now back reforms or proposals for decoupling electricity prices from the price of gas, as well as a price cap on gas, as skyrocketing power prices fuel inflation and hurt businesses across Europe.
Benchmark power prices in Europe have reached all time highs, as natural gas supply from Russia continues to be limited ahead of the winter. The EU energy ministers are set to hold an emergency meeting to discuss the crisis on September 9 in Prague.
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