During a debate with MEPs in Strasbourg on Wednesday 8 June, European Commission President Ursula von der Leyen questioned the current functioning of the EU’s wholesale electricity market.“This market system does not work anymore. We have to reform it. We have to adapt it to the new realities of dominant renewables”, she responded to interventions from several parliamentarians on rising energy prices.
In her view, the problem with the wholesale electricity market is that gas now sets the price for all electricity producers (regardless of the energy source used) because of the sharp fall in the cost of renewable sources in recent years.
The market is based on a marginal pricing system, also known as a ‘pay-as-clear’ market, whereby all electricity producers get the price of the producer using the most expensive energy source.
The President’s words contrast somewhat with the findings of the European Agency for the Cooperation of Energy Regulators (ACER).
In an assessment published at the request of the Commission on Friday 29 April, ACER states that “the current market design is worth keeping” and “is not to blame for the current (energy) crisis”
However, the report adds that “some longer-term improvements are likely to be prove key” for “decarbonisation”.
