delink the price of electricity from the price of gas

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Gas determines the price of energy, despite the fact that producing through solar or wind power is much cheaper. The marginalist system is the best we have, but now from the European Commission have opened the door for the first time to modify this pricing systemwith an eye toward trying to reduce dependence on gas.

Kadri Simson, European Commissioner for Energy, met this week in Madrid with Teresa Ribera, Minister for the Ecological Transition, and has left the door open for a change in the electricity pricing system. Simson explained that the crisis with Russia could cause gas supply problems and anticipated that for this spring they want to present new ideas to accelerate the deployment of renewables.

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The reform of the electricity market is no longer a far-fetched approach

Through a filtered draft by Euactiv it was learned that the Commission expects the price of energy to remain highly volatile until at least 2023. However, no significant structural change in the price system was included.

All eyes point to a report that the Agency for the Cooperation of Energy Regulators (ACER) should present in April. as described infofreethe Spanish minister insisted that exceptional measures are needed and the european commissioner left the door open, even if it is just a crack. A possibility that to date was quickly denied.

“In the long term we need to identify whether those adjustments are necessary to reduce volatility,” explains Simson. The study is carried out by ACER, who to date has been unfavorable to structural reform. We will see if there is a change in the April report, driven by recent events with Ukraine.

The underlying problem is that the price system is going to continue to rise, driven by a gas whose price has a huge impact on the price of energy. Which results in an “unsustainable” electricity bill, not only in Spain, as recognized by the European Commissioner herself. What has long been a far-fetched solution is no longer being forcefully rejected from Europe. A continent that is beginning to rethink options that until now were considered unthinkable.

It does not mean far from it that the Commission is going to adopt this structural reform, but it is significant of the importance they give to how gas is having a negative impact on our electricity bill.

Image | Mykola Makhlai

Gas determines the price of energy, despite the fact that producing through solar or wind power is much cheaper. The…

Gas determines the price of energy, despite the fact that producing through solar or wind power is much cheaper. The…

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