Europe is working on “a structural reform of the electricity market
France had asked last April for a change in the rules of operation of the European electricity market. “You have electricity prices that are soaring and no longer have anything to do with the costs of producing electricity, it follows the gas, it’s absurd,” alerted President Macron
Indeed, the price of electricity is determined by the most expensive plant – currently gas-fired plants. Prices on the futures market are reaching record levels. For electricity delivered next year, the price in Belgium is 611 euros per MWh. in France, the price of electricity for delivery in 2023 reached 875 euros per MWh on Thursday, an increase of about 80 euros.
Southern EU countries like Spain and Greece have also been calling for market intervention for months. So far, however, they have been unsuccessful, in part because of German resistance.
More recently, several European states have asked to consider a “decoupling” of gas and electricity prices.
On Sunday, Belgian Energy Minister Tinne Van der Straeten (Groen) called for a European-wide cap on gas prices.
“Today, electricity is produced at a much lower price than the price at which electricity and gas are sold. Today we are in a war economy, there is no longer any link between the cost of production and the cost of sale. There is a lot of speculation,” she explained.
On the same day, Austrian Chancellor Karl Nehammer called on the EU to “decouple the price of electricity from that of gas” to “stop this madness”.
Germany, which has so far been opposed to any change to the current regime, is also beginning to understand that this is the only possible solution. German Chancellor Olaf Scholz said at a press conference in Prague that the current system “cannot be described as functional if it leads to such high electricity prices.
On Monday, European Commission President Ursula von der Leyen announced that the EU is preparing “a structural reform of the electricity market”.
“The skyrocketing electricity prices are now exposing, for different reasons, the limitations of our current electricity market design. It was developed under completely different circumstances and for completely different purposes. It 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.”
The Czech Presidency of the EU Council indicated that it would convene an emergency meeting of EU energy ministers on 9 September in Brussels.