After announcing this Monday a “emergency intervention” of the energy market, the European Commission is considering limit the price of renewable energy to contain the electric bill and advise against extending the Iberian exceptionaccording to a report from the technicians of the European Union to which RTVE has had access.
In this first draft, Brussels proposes to introduce a price limit for “inframarginal electricity generation technologies” – such as renewables, nuclear and lignite–, since it considers that they have “lower performance” and greater benefits than gas plants. The objective of this measure is that the commercial profitability of these technologies is independent of the marginal price of electricity.
This limitation “would additional financial benefits for the Member States”, assures the document, which indicates that this resulting income should be shared with consumers in order to “reduce your bills”.
“Brussels studies limiting the price of renewables to contain the electricity bill@maria_caroucorrespondent in Brussels, explains the first draft of the technicians of the European Commission
— 24 hours RNE (@24horas_rne) September 1, 2022
As a consequence of the price limit, the countries would also have financial resources to finance interventions in retail prices. In this sense, “the package would provide greater legal certainty to the efforts of the Member States to protect certain types of consumers from the impact of high electricity prices through regulated rates,” defends the draft.
To all this should be added a reduction in European electricity consumptionbut without influencing the electrification objectives, necessary to stop depending on fossil fuels.
It advises against extending the Iberian exception due to the impact on gas consumption
Likewise, the technicians have analyzed several of the interventions applied in the member states, including the exception applied in Spain and Portugal, to assess the impact that these measures have both on consumers and on energy consumption.
Experts have advised against extending the Iberian mechanism because, although it has managed to reduce electricity rates and could be equally effective in the rest of the EU, the measure “incentivizes the use of gas for power generation”something that collides with the objective of reducing its consumption by 15% until spring.
This increase in consumption would be concentrated especially in those Member States with a high dependence on Russian gas, some of which would also be greatly affected by a possible interruption in supply during the coming winter.
Von der Leyen opens the door to reform the electricity market
On Monday, the community president, Ursula von der Leyen, opened the door to emergency intervention in the electricity market and address its reform to deal with Russian energy “blackmail”. Thus, he pointed out that the current electricity market was developed under different circumstances and with different objectives. Therefore, “it is no longer suitable for those purposes.”
“We study studying the caps on the price of gas, see what option is possible and we have technical seminars (…) we will see the different possibilities, at full speed, and we want to see the comments of the Member States,” said the deputy director on Thursday General of the Directorate General for Energy of the European Commission, Mechthild Wörsdörfer, who has pointed to the emergency meeting of European energy ministers on September 9, in which measures to intervene in the market will be on the table.
“But this takes timeVon der Leyen could not promise it for tomorrow”, defended Wörsdörfer, who stressed that the Community Executive faces this structural reform “with an open mind”.