Everything we have experienced so far in the electricity market may be little compared to what is to come. For this reason, the European Commission has just announced that it is thinking of an “emergency intervention”, according to The country.
Ursula Von der Leyen, President of the Commission, states that she has stated in a speech that “the vertiginous increase in electricity prices is revealing the limitations of our current electricity market design”. That is to say, what months ago Portugal and Spain denounced before the rest of the Member States.
unsustainable prices. Dependence on Russian gas continues to suffocate countries like Germany, where crazy prices have already been seen. And it goes to more. The price of electricity for the German wholesale market for 2023 has reached €1,000 per megawatt-hour (MWh). This is a 100% increase since last August 16, when the situation was already critical. In fact, it was already critical a year ago, at €100/MWh.
and it goes to more. If the autumn points catastrophic and the European Commission fears the worst, in countries like France, what may be the next few months has already been experienced for a few hours. The Gallic country experienced prices of €2,712/MWh at seven in the morning and €2,987/MWh between eight and nine on April 4. Without going to those figures or to the future, Spain would be at €521.3/MWh today if it had not approved the gas cap. France is for €740/MWh, while Germany will now exceed €/MWh.
UK goes free as always. Amid this desperate search for solutions, UK energy regulator Ofgem announced three days ago increase in the maximum figure that electricity and gas companies can charge to households.
After having tripled since two years ago, the new increase is not minor. It rises 80% to reach 3,549 pounds, which is about 4,157 euros at current exchange rates. The CEO of the regulator, Jonathan Brearley, has stated that, given the current situation with Russia, “Ofgem has no choice but to reflect these cost increases in the maximum price.”
The Iberian cap on gas, the way forward?. Thanks to the joint work of Spain and Portugal, Europe finally gave the go-ahead to set a maximum cap of €50/MWh in our country and in the neighboring country. It has not been perfect, but at times like the end of June, this Iberian exception has managed to save Spaniards 30% on their electricity bills. In July, for example, the price of the gas ceiling (and the VAT reduction) lowered the PVPC invoice by 18% of the regulated market.
What at that time was reluctantly granted to Spain and Portugalis now contemplated as a solution for the rest of the Member States, according to The Energy Newspaper. The German Government proposes to unlink the price of gas and electricity so that there is no contagion. It is a measure that would leave behind an almost immovable idea, that both values must go hand in hand. Austria and Belgium also ask for measures to establish limits and that the price of electricity be close to the real cost of production, instead of depending on what Putin marks.
In the absence of knowing concrete measures, we are left with the words of Von der Leyen: the “emergency intervention” is being prepared in the market, of which “the limitations of our current design” have become clear. We hope to know more measures from September 9, when the energy ministers of the European Union meet.
Featured Image | Sina Schuldt/AP