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High electricity prices, renewables and windfall profits – all paid for by EU citizens
(EurActiv, 2 Feb 2022) The ongoing electricity price hike fuelled by the gas crisis makes a reform of EU power market rules more urgent than ever, argue Mike Parr and Simon Minett.
Mike Parr is the director of PWR, a UK-based company providing market research and technical support in the field of renewables and energy efficiency. Simon Minett is the founder of Challoch-Energy, a consulting firm.
In our previous contributions to EURACTIV (here and here,), we called for an urgent reform of electricity markets as part of the transition to a zero-carbon economy.
The current high electricity prices, caused by surging gas prices, adds urgency to the need for reform.
Since October, the EU’s Agency for the Cooperation of Energy Regulators (ACER) has been tasked with reviewing the functioning of this market, given the surge in electricity prices. In its preliminary report published in November, the organisation forecast that high electricity prices (€90 to €160/MWh) will be with us for at least two years.
This forecast is reflected in hedging activity by owners of renewable plant with prices for 3rd quarter 2022 of around €90/MWh (source: EEX).
While undertaking its review, ACER might wish to consider the fact that EU citizens because of current market structures, are being “taxed” twice: Once via VAT, an element in all electricity bills, and twice via the increase in power prices which delivers windfall profits to companies and in some cases governments.
EurActiv, 2 Feb 2022: High electricity prices, renewables and windfall profits – all paid for by EU citizens
