The President of the EU Commission has demanded an “emergency intervention” into the electricity market to curb prices as warnings emerge that further spikes in energy costs are to be expected.
European Commission President Ursula von der Leyen has demanded an “emergency intervention” into the bloc’s electricity market in the hopes of curbing prices, with other experts warning that the current difficulties being faced in Europe could last for years to come.
The demand comes as one senior expert in Germany has warned that officials should understand that the price of energy could end up spiking beyond initial estimates, though warned that slapping price caps on the open market — as Britain has with consumer prices, causing some energy companies to collapse — could do more harm than good.
According to a report by Euronews, von der Leyen openly urged her fellow Eurocrats on Monday to intervene in the bloc’s energy market, which she described as being “no longer fit for purpose”.
“The skyrocketing electricity prices are now exposing, for different reasons, the limitations of our current electricity market design,” the broadcaster reports von der Leyen as saying.
“[The market] was developed under completely different circumstances and for completely different purposes,” she continued.
“That is why we, the Commission, are now working on an emergency intervention and a structural reform of the electricity market,” the commission president went on to declare. “We need a new market model for electricity that really functions and brings us back into balance.”
According to Euronews, the European energy market is heavily tied to the price of natural gas, the value of which has surged since Russia’s renewed invasion of Ukraine earlier this year.
Many now expect the price of electricity on the European continent to surge over the winter period, with an energy expert from the Leibniz Institute for Economic Research — one of Germany’s largest economic think tanks — warning that prices could end up spiking beyond initial predictions.
“If the supply then remains tight, for example if half of the French nuclear power plants continue to fail, or if the supply is even tighter, as with the shutdown of the three remaining German nuclear power plants, the electricity price can reach further unexpected price peaks,” think tank expert Manuel Frondel is reported by Die Welt as saying.
However, despite this warning, Frondel went on to warn against government interventions into the market that would see the price of energy capped, with the economics tsar saying that such a move would likely only do more harm than good.
“Interventions in the market’s pricing mechanism [would be] completely the wrong way to react to this,” the expert reportedly claimed.
“Social hardship should be cushioned as specifically as possible in low-income households,” he instead suggested. “It would also be conceivable to have another energy price lump sum, as is now being granted in September 2022 and in which low-income households are more favoured than wealthy households, since wealthy people have to pay more tax on this lump sum.”
As things stand now, however, it appears that EU officials need to start worrying not just about this coming winter, but the many winters to come, with a number of experts now predicting that the current gas chaos could go on for years.
“It may well be that we will have a number of winters where we have to somehow find solutions,” the head of fossil fuel giant Shell reportedly warned on Monday.
“That this is going to be somehow easy, or over, I think is a fantasy that we should put aside,” he went on to say.