EU Needs Power Market Reform By Summer

The EU must reach a political deal to reform its electricity market by this summer to ensure it is ready to withstand further energy turmoil next winter, Pascal Canfin, chair of the parliament’s environment committee said.

• The EC is due to table a proposal in March with which it aims to weaken the price-setting status of natural gas while better reflecting the growing share of renewables in power generation.
• The current market uses a marginal pricing model, where the most expensive form of energy needed to satisfy demand sets the price.
• Critics argue that the current model has distorted the market because of soaring gas prices, which is hurting consumers and generates windfall profits for power companies.
• “We are in a situation, where our electricity price sold on the market, produced at home and decarbonized, is fixed by an energy which is fossil-based and imported. It means that we let our price set by the US, Putin, Qatar, Algeria. I don’t think it is reasonable”, Canfin said.