European politicians want to separate the price of gas from that of electricity
The European Union is preparing emergency plans to impose a ceiling on the price of gasand also to separate its price from that of electricityEUas well as longer-term reforms aimed at ensuring that the price of electricityEUthis reflects the lower prices of renewable energy, writes BTA.
The Ministers of Energy of the member countries of EU will meet on September 9 to discuss how to urgently lose weightEUtta of energy prices for businessEUand households.
Energy prices in Europe have skyrocketed over the past year under pressure from record prices of gasand, after Russia gradually reduced its supplies to the Old Continent.
European governments accuse Moscow of using blackmail energy in response to Western support for Ukraine, which has been subjected to Russian aggressionEUiya. “Gasprom” claims that the reduction and suspension of gasthese deliveries is due to the sanctions and due to technicalEUki problems.
Changing the energy system of the 27 member countries is a long and complex processEU, and politicians are trying to find a short-term solution. Reuters summarizes what energy market reform decisions could be made in the coming days and what they could lead to.
Why is the price of electricity linked to that of gas?
In the European energy system, the price of electricityEUwholesale is determined by the last plant needed to meet demand.
Wind, nuclear, coal and gasThese plants, like any other power generators, bid on the energy market, with the lowest bidders first and the more expensive ones, for example, gasthe ewes come next. Gasthe power plants hEUthey are the ones who determine the final price.
The idea is that everyone sells electricityEUtvo at one price, and cheaper renewable plants to earn more, which will stimulate invEUtions in exactly the kind of energy capacity that Europe needs to meet its climate goals.
But some countries, for example Spain, consider the system nEUfair as end users pay the same price for both expensive and cheap as sebEUelectricity supply.
The prices of gasand rose after Russia reduced the volumes supplied to Europe, and the demand on the world markets jumped sharply. As a result, the price of electricityEUthat produced by burning gassuddenly shot up to the sky.
At the end of August the futures for current for January in Germany they jumped to 1,050 euros per megawatt hour, which is 14 times more than a year earlier. Subsequently, however, prices fell.
About the increase in the price of electricityEUthere are also other factors, such as the problems of the French nuclear plants and gEUcurrenta drought in Europe that reduced hydroelectric capacityEUplants and affected coal deliveries by river transport.
How can the EU change energy prices?
European Commission President Ursula von der Leyen recently stated that EU must allocate the cost of an electrEUthat of that of gasbut without giving further details.
A Commission draft document seen by Reuters last week revealed that the proposals of EU include imposing a ceiling on the price of currentand from certain centers that do not work with gas.
The surge in prices has led to excess profits for some lower-cost plants, such as wind and nuclear. EU believes that member states should use the price cap to seize these profits and use them to support consumer bills.
The Czech Republic, which currently holds the rotating presidency of the EUhas presented proposals for discussion by energy ministers when they meet on Friday.
These include imposing a ceiling on the price of gasa, imported from certain countries, a ceiling on the price of gasa, used to produce electricityEUtvo, or temporary withdrawal of power plants operating on gasfrom the European system for determining the prices of currenta.
The idea of a ceiling on the price of gasor an electricianEUit has long been supported by Spain, Belgium and other countries, including the previously wavering Austria and Germany. France is among the countries that want the price of gasbut to be separated from that of an electricianEUthe thing.
SameEUthere is also an idea proposed by the Italian Prime Minister Mario Draghithe member countries of EU to impose a ceiling on the price of gasa, imported from Russia. Opponents of the idea say it could lead Moscow to cut off all supplies to Europe.
Another possibility is that the member states set a ceiling on the price of gasand to pay companies the difference between the ceiling and the real market price. Countries such as Germany and the Netherlands have until recently opposed this idea, as it would effectively provide subsidies with a totalEUmeans of generating energy from fossil fuels. According to them, it is better to use these funds for the transition to cheaper and cleaner energy.
The Czech proposals also include a temporary restriction of trade with current on European exchanges to daily and “day-ahead” auctions. Other ideas envisage limiting the access of financial speculators to gasov markets and the creation of a parallel market of currentproduced through gasseparated from the presentEUthe existing electricity market.
What are the potential drawbacks?
The high price of gasand are an incentive for businessEUand households to limit consumption of gas. Governments are trying to encourage such a change in behavior to have enough fuel for the winter.
The imposition of a ceiling on the price of gasbut would remove this incentive and may even encourage consumers to use more gasas governments seek to reduce consumption, critics say.
Analysts are of the opinion that financial support for low-income households and businessesEUthose most affected by high prices is a better policy than hastily changing the structure of the market.
The question of how to put a ceiling on the price of gasa, without forcing the operators of gasthese power plants to limit production at a time when most countries need more and more current.