The heads of five of Europe's largest energy trade bodies have written to the EU and its member states urging them not to change the current electricity pricing mechanism because of the continent's energy crisis, but instead to work on promoting renewable energy on a larger scale.
They called on the EU and its member states to move away from fossil fuels, invest in clean energy alternatives, accelerate energy savings, activate demand response, while avoiding changes to current electricity pricing mechanisms.
"Short-term interventions, such as wholesale price or retail price caps, that undermine the ability of the energy market to provide a safe and efficient balance of supply and demand for the spot market and increase the cost of the energy transition should be avoided," the letter reads.
During the region's electricity crisis, the European electricity market proved to be "extremely efficient in ensuring safe power supply for consumers, while providing incentives for clean energy investment," the letter said, adding that including power purchase agreements and long-term hedging , the forward market "sends strong signals for investment in renewables, energy storage and consumer-driven solutions."
Multiple trade bodies write to European Commission, heads of member states and energy ministers urging opposition to any intervention
EU member states are scrambling to set new renewable energy targets in an effort to reduce their reliance on Russian fossil fuel imports. PV Tech Premium examines the impact of the European energy crisis on PPA contracts and European commercial transaction strategies, and explores how Russia's invasion of Ukraine will reshape Europe's energy institutions.
The signatories are Mark Copley, CEO of the European Energy Traders Federation (EFET), Kristian Ruby, Secretary General of Eurelectric, Christian Baer, Secretary General of Europex, Walburga Hemetsberger, CEO of SolarPower Europe, and Giles Dickson, CEO of WindEurope. The letter is addressed to European Commission (EC) President Ursula von der Leyen, other EC heavyweights, as well as European heads of state and energy ministers.
In the short term, the letter states, measures are needed to protect customers from energy price volatility, but direct support measures for vulnerable consumers are "the most cost-effective and least distortive way to achieve the EU's goal of clean energy independence."
The signatories also suggested that "maintaining market signals and providing certainty to investors is critical to directing needed private investment into renewable energy, carbon-neutral energy supply and infrastructure."
"Any intervention in the wholesale electricity market will not address the underlying problem at hand - excessive reliance on imported fuels, and these market interventions will fundamentally distort dispatch and investment signals that are integral to resolving the crisis,"
The heads of the trade groups said Europe's energy industry was "ready to use experience and practical knowledge to serve policymakers" but "hope that the EU will take the lead in resolving this crisis situation."
They called on the European Commission and all member states to ensure "due consideration of these input factors in future resolutions", while also criticizing decisions by some countries to intervene in internal energy markets.
The letter said individual decisions were "the worst option, as they disrupt the internal energy market and potentially undermine a strong, unified European market."
An example is the decision jointly proposed by Spain and Portugal to reduce electricity prices to a maximum of €30/MWh ($33/MWh).