Europe’s benchmark electricity price has fallen more than 50% in the past three days from record highs amid signs of a concerted effort within the EU to ease the worsening energy crisis, Bloomberg reports.
German electricity futures for a year ahead tumbled as much as 54% from Monday’s peak above 1,000 euros per megawatt hour as the European Union mulls various market intervention measures to ease massive energy costs crippling economies across the bloc. Rising prices have forced cuts in industrial production from steel to fertilizer production, with little sign yet of an imminent easing of the energy crisis.
“The expected EU intervention in the market to cap prices is interpreted as a factor in reducing market energy prices, although there is still a lot of uncertainty around what initiatives the EU will take and what they will look like in detail,” commented analysts from Energi Danmark , quoted by the Bloomberg agency.
Germany’s one-year-ahead contract on the EEX energy exchange fell on Thursday to 486 euros per MWh after hitting a record high of more than 1,000 euros earlier in the week. Despite this drop, the current price is still about 10 times the seasonal average over the past decade.
All eyes are on the European Union for possible intervention in the energy market. Such intervention could include some form of price cap or a tax on the excess profits of power-producing companies, said Mechtild Wörsdörfer, a senior energy official at the European Commission.
Earlier this week, German Chancellor Olaf Scholz pointed out: “In the past there was a very skeptical debate about whether it really made sense to change the design of the energy market. However, that skepticism has disappeared and everyone has joined in. The pressure is so great that I am really confident it can happen quickly”.