Brussels, (Asian independent) “Skyrocketing” energy prices expose the limits of the European Union’s (EU) electricity market design, European Commission President Ursula von der Leyen said while announcing plans for a structural reform.
The market “was developed under completely different circumstances”, von der Leyen said on Monday.
“That’s why we, the commission, are now working on an emergency intervention and a structural reform of the electricity market,” she said, without elaborating on the changes under consideration.
The EU has grappled with surging energy prices for the last six months in the wake of the Russian invasion of Ukraine.
An emergency meeting of EU energy ministers is planned for September 9.
Electricity prices in the European market are set by the most expensive energy source needed in production, currently gas-fired power plants.
Against the backdrop of the Ukraine war, wholesale gas prices spiked, resulting in more expensive electricity.
A reform of the European electricity market could revise this so-called merit order mechanism and allow consumers to pay less for cheaper electricity generated with solar and wind energy.
German Economy Minister Robert Habeck also recently announced market reforms to separate customer prices for electricity from the rising cost of gas.
Praising EU efforts to end a chronic over reliance on Russian fossil fuels, von der Leyen cautioned against developing a new dependency on China for strategic raw materials like Lithium for batteries.
“Out of the 30 critical raw materials today, 10 are mostly sourced from China. So we have to avoid falling into the same dependency as with oil and gas,” von der Leyen said.
