1/ Eurolectric, the Association of European incumbent energy firms, provides a distorted description of the Spanish proposal to reform electricity markets. Difficult to discuss false claims. They must have read another document…
2/ One would expect incumbents to reject a proposal that weakens their market power to achieve competitive electricity prices for consumers. Still, corporate interests should be defended with sound arguments, not distortions. The much-needed debate is not possible otherwise.
3/ The energy discussion in Europe is now a fight between incumbents and consumers…Incumbents are few but have much to lose and are powerful …while consumers are many, they have much to gain but are weak...The @EU_Commission and the Member States should defend the #CommonGood
4/ #Competitiveness is part of this #CommonGood, but it's at risk 📢. Competitiveness is better protected through competitive energy prices set in well-designed markets whenever possible, than by entering a race with the US in supporting low-carbon investments with public money
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1/Von der Leyen “Current electricity market design is not doing justice to consumers They should reap the benefits of lowcost renewables We will do a deep and comprehensive reform of electricity markets” politico.eu/article/ursula…
Which should be the building blocks of the reform?
2/ On the objectives:
➡️*Productive efficiency*: demand must be met by the plants with the lowest marginal costs 📉📈
➡️*Investment efficiency*: investments must take place at the right scale, mix, and locations 🌞🍃
➡️*Equity*: prices should be cost-reflective 🪙
Good news from #Brussels
The leaked @EU_Commission non-paper on Emergency Electricity Mkt Interventions addresses the root sources of the 10-fold electricity price increase:
➡️Excessive profits of inframarginal technologies (nuclear, hydro, renewables)
➡️Gas scarcity
🧵 Thread
The proposals imply a big step #forward in our understanding of how #electricity markets should be designed
And watch out 🔊 because emergency measures pave the way to #structural reform!
Some key reasons & thoughts...
1/ Acknowledging that not all technologies should be paid at the cost of gas-fired generation is equivalent to acknowledging that:
📢 a single *technology-neutral* *energy-only* market design is not adequate – under emergencies & beyond
1/ Lo más importante, por las implicaciones que tiene: la CE admite la existencia de “Windfall Profits”
La subida de los precios del gas está provocando beneficios excesivos en el resto de tecnologías de generación eléctrica (nuclear, hidroeléctrica, renovables a mercado)
2/ Wholesale markets create the potential for profits for many electricity generators that are well in excess of the costs related to operations or capital recovery
Lo dice la @IEA. Estima el exceso de beneficios en 2022 en 20.000M€ si no se hace nada iea.org/reports/a-10-p…
1/ Que este mercado eléctrico era una bomba de relojería, lo llevamos denunciado muchos durante mucho tiempo. Hasta que la bomba explotó.
2/ Los precios de la electricidad hoy multiplican por 10 la media de la década anterior.
3/ Y va para largo. La guerra Europa-Rusia no se va a resolver mañana. Seguimos dependiendo de su gas tanto como ayer. Y los precios del gas pueden seguir elevados por mucho tiempo.
¿Podemos soportar estos precios de la electricidad mucho más?
Decarbonisation requires making fossil energy more expensive – that’s the whole purpose of carbon pricing. Well, here we have expensive gas & oil! Will this help the energy transition?
Thread! 🧵✍️
The answer is highly unclear because: 1/ higher energy prices promote efficiency, but...
2/ it is now harder to add more price pressure to consumer bills, and
2/ gas prices have pushed electricity prices up, so the relative price of low-carbon energy has not improved
2/ Higher electricity prices bring no good news for the environment as the #GreenDeal relies on electrification to decarbonize polluting sectors of the economy
Expensive electricity will delay much needed investments in electric mobility, electric heat pumps, #GreenHydrogen….
1/ Corremos el riesgo de que la Transición Ecológica descarrile si no atendemos adecuadamente sus impactos distributivos. Hay que poner en marcha políticas correctas que, de partida, no generen desequilibrios distributivos🫂
2/ La Transición Energética es una exigencia medio ambiental y económica. Keynes ha vuelto de la mano del Plan de Recuperación, Transformación y Resiliencia y de su condicionalidad verde y digital 🍃☎️