Thursday

8th Dec 2022

EU plans 'emergency intervention' on electricity price

  • Ursula von der Leyen made the comments at a press conference in the Slovenian town of Bled on Monday (Photo: EC - Audiovisual Service)
Listen to article

The EU is working on an "emergency intervention" plan to stem surging energy prices, Commission president Ursula von der Leyen said during a speech in the Slovenian town of Bled on Monday (29 August).

"The skyrocketing electricity prices are now exposing … the limitations of our current electricity market design," she said, adding that "structural reform of the electricity market" will be needed.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

Details of the plan are not yet clear, but pressure on the EU to formulate a general response to the extreme price surge is mounting.

Wholesale day-ahead electricity prices — the prices energy companies pay for that day's electricity — breached €700 per megawatt-hour in some countries on Monday, including France and Austria, compared to an average of €20 and €50 per MWh last year.

German benchmark power prices for 2023 breached 1,000 euros per megawatt hour for the first time on Monday.

To alleviate pressure on individual member states, German chancellor Olaf Scholz on Monday urged the European Union to take swift action in reforming its electricity market.

"We are in complete agreement that rapid action has to be taken" on reforming the market," he said at a press conference with Czech prime minister Petr Fiala, whose country holds the rotating presidency of the EU.

Czech industry and trade minister Jozef Sikela announced a special meeting of energy ministers on 9 September. Maximising the gas price is one of the proposals that the Czech Republic wants to put on the table, Sikela said.

Another proposal could be the decoupling of gas prices and electricity prices.

Even though renewable energy has never been cheaper, electricity prices are determined by the most expensive generator, which currently is gas.

Critics say that this disincentivises the move to renewables as a replacement for gas.

"One of the proposals we are making is to cap the price of gas used for electricity generation," Sikela told reporters in Prague on Monday. The decoupling of gas and electricity prices could therefore only be partial. "It is not a question of completely separating the markets, but of removing the gas intended for the production of electricity from the system."

"Our current electricity market design was developed under completely different circumstances and for completely different purposes. It is no longer fit for purpose," von der Leyen also said on Monday.

Bailouts

As lawmakers are starting to realise energy security can not be left solely in the hands of markets, European utilities are calling on governments for bailouts.

Already in July, France announced it would nationalise debt-laden EDF, at a cost of nearly €10bn.

On Monday, Düsseldorf-based energy giant Uniper asked the German government for an additional bail-out of €4bn (on top of the €15bn bail-out deal already agreed on in July), as it reported cash losses of "well over €100m per day."

On Sunday, Austrian finance minister Magnus Brunner said Wien Energy, the country's biggest energy supplier, was in "financial distress."

Although he didn't mention a specific figure, Heute newspaper reported on Monday that €1.7bn could be needed to cover short-term costs.

Initially sceptical of the idea, Austrian Chancellor Karl Nehammer on Sunday said he would support an EU-wide price cap on electricity prices.

"We must finally stop the madness that is taking place in energy markets. I call on all the EU 27 (member states) to stand together to stop this price explosion immediately," he said in a statement issued by his office.

Russia cuts Nord Stream 1 gas to 20% capacity

It comes a day after EU governments approved a watered-down plan to curb gas demand by 15 percent, aimed at lowering consumption, building storage, and sharing supplies if Russia in future cuts all exports.

EU now mulling options to reduce electricity demand

The EU mulls measures to cut electricity demand, as part of its efforts to tackle skyrocketing energy prices, after focusing efforts on reducing gas consumption amid concerns that Russia could further curb gas flows.

Stakeholders' Highlights

  1. Nordic Council of MinistersLarge Nordic youth delegation at COP15 biodiversity summit in Montreal
  2. Nordic Council of MinistersCOP27: Food systems transformation for climate action
  3. Nordic Council of MinistersThe Nordic Region and the African Union urge the COP27 to talk about gender equality
  4. International Sustainable Finance CentreJoin CEE Sustainable Finance Summit, 15 – 19 May 2023, high-level event for finance & business
  5. Friedrich Naumann Foundation European DialogueGender x Geopolitics: Shaping an Inclusive Foreign Security Policy for Europe
  6. Obama FoundationThe Obama Foundation Opens Applications for its Leaders Program in Europe

Latest News

  1. No, Bosnia and Herzegovina is not ready for the EU
  2. EU takes legal action against China over Lithuania
  3. EU Commission shoring up children's rights of same-sex parents
  4. The military-industrial complex cashing-in on the Ukraine war
  5. EU delays Hungary funds decision, as Budapest vetoes Ukraine aid
  6. Borrell gets pension from MEP fund set for taxpayer bailout
  7. Autocrats make us all less secure
  8. Big Agri's lies: green EU farming not to blame for food insecurity

Stakeholders' Highlights

  1. EFBWW – EFBH – FETBBA lot more needs to be done to better protect construction workers from asbestos
  2. European Committee of the RegionsRe-Watch EURegions Week 2022
  3. UNESDA - Soft Drinks EuropeCall for EU action – SMEs in the beverage industry call for fairer access to recycled material
  4. Nordic Council of MinistersNordic prime ministers: “We will deepen co-operation on defence”
  5. EFBWW – EFBH – FETBBConstruction workers can check wages and working conditions in 36 countries
  6. Nordic Council of MinistersNordic and Canadian ministers join forces to combat harmful content online

Join EUobserver

Support quality EU news

Join us