Experts from the Austrian Energy Agency consider intervention in the European electricity market conceivable. However, there could be potentially unwanted consequences, such as higher prices. The current crisis is about a “market failure”, Karina Knaus said in an episode of the podcast “Petajoule”.
This is evidenced by the fact that prices for all energy sources would increase with the price of natural gas. This situation reminds Knaus of the oil crisis in the 1970s, with years of high energy prices and inflation figures. Even then, the way out would have been more energy efficiency and an expansion of renewables.
The most expensive power plant determines the price
Currently, the most expensive power plant needed to meet the demand for electricity determines the price. Currently, these are gas-fired power plants or nuclear and coal plants across Europe, as they have extremely high prices due to supply restrictions in Russia and the drying up of rivers in Germany and France. Hydroelectric power stations, wind turbines and photovoltaic systems then follow suit and make high profits.
According to Christian Furtwängler of the Energy Agency, it would also be possible “for everyone to get exactly the price they are offering.” The wholesale price for electricity would then be the volume-weighted average. “It sounds great at first, because of course everyone has the current form (…) in mind. The problem is that you cannot adopt the same behavior in such a market system,” said the expert. In such a case, the electricity producers probably offer less money on the market. You would try to guess who is the most expensive power plant at the moment and try to sit a little below that, Furtwangler said.
This system could even drive up prices. One possibility is that the competitors are not coordinating. According to the Energy Agency, electricity producers currently offer their marginal costs, ie the costs incurred by an additional unit produced. Gas prices in Europe continued to rise on Friday. The futures contract TTF on the energy exchange in the Netherlands, which is used as a reference, reached the price of 249 euros per megawatt hour in the afternoon.
Source: Krone

I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.