Brussels defends elimination of electricity market intervention measures in the face of price stabilization

The European Commission has defended in a report published on Monday the withdrawal of electricity market intervention measures such as the cap on revenues to infra-marginal energies --nuclear, renewables--, established in September 2022 to cope with the electricity price spike resulting from Russia's attack on Ukraine in the face of the current price stabilization.




The restriction was set at a cap of E180 on market revenues per megawatt hour (MWh) of electricity produced in order to minimize the impact on the final electricity price of costly price-determining marginal sources such as coal or gas, while ensuring a reasonable return on investment for the affected technologies.




However, the report notes that electricity prices have fallen to below E80 per MWh and the electricity price spikes observed throughout 2022 are considered "less likely in the coming winter".




Given this stabilization of energy prices, Brussels considers in its new report, prepared on the basis of a public consultation, that the benefits of the current infra-marginal revenue cap "would not outweigh the impact on investor security and risks to market functioning and transition".




The review has found that the application of the revenue cap varies widely from one Member State to another, which has led to "great uncertainty among investors", compounded also by the fact that, in some EU countries, the application of the cap has affected the conclusion of power purchase agreements and other long-term contracts.




The Commission's conclusion is thus in line with the responses received from the majority of respondents to the survey, who opposed an extension of the measure because of the uncertainty it has caused among investors.




Given the current conditions, Brussels also sees no need to extend other market intervention measures, such as demand reduction, which has also been structurally introduced in its proposed electricity market review, which will also allow Member States to temporarily intervene in retail markets by setting a below-cost price for households and SMEs in the event of possible future crisis situations.