Electricity: Intervention for prices in the Commission from Greece – Romania – Bulgaria – 2024-10-02 16:31:29

The energy ministers of Greece, Romania and Bulgaria are asking the Commission to take measures to deal with the sharp rise in prices in the wholesale markets of Southeast Europe, which was observed last summer, due to external factors.

In particular, on the initiative of the Greek Minister of Environment and Energy, Mr. Theodore Skylakakis, a relevant, joint letter was sent (27/9) to the EU Energy Commissioner, Mrs. Kadri Simson, which was co-signed by the Minister of Energy of Romania, Mr. Sebastian – Ioan Burduja and the Minister of Energy of Bulgaria, Mr. Vladimir Malinov.

In the context of the letter, the three Ministers point out that price volatility in Southeast Europe has put significant pressure on the countries’ economies, threatening both energy security and market stability across the region.

The key issues they raise include:

• The lack of interconnection capacity: The lack of cross-border interconnections hinders efficient electricity flows in the South East Europe region at critical times, exacerbating price increases, especially during evening peak hours, when Renewable Energy generation is reduced. Developing these missing interconnection links is crucial to easing congestion and converging cross-border prices.
• The fragmentation of energy markets: The limited integration of regional electricity markets with the wider EU system has led to significant price discrepancies, with disparities often exceeding €50-100/MWh. To restore market coherence and improve price stability, it is necessary to accelerate infrastructure investment and integrate our markets more closely with the EU market.
• Reduced flexible generation capacity: The availability of flexible generation sources, particularly hydropower, has been limited by prolonged droughts, leading to greater reliance on coal and natural gas-fired plants. This situation highlights the urgent need to invest in flexible and clean production capabilities.
• Geopolitical factors and security of supply: The reversal of traditional electricity flows due to Ukraine’s transformation into a net importer from the Southeast European region is further straining the system, pushing up prices.

Proposed measures to address the situation

Given these challenges, the letter emphasizes the need to take the following measures to address the situation:

• Short-term measures: Immediate measures should be considered, such as taxing the surpluses of electricity producers and traders. Revenues from this taxation could be redistributed to ease the burden on consumers and stabilize the market in the short term.

Cooperation between national regulatory authorities for market surveillance should also be strengthened.

• Long-term measures: The European Commission should prioritize the development of basic interconnection infrastructure in South East Europe.

In this light, the main requests of the three countries to the European Commission are summarized as follows in the joint letter:

• Prioritize the development of interconnection networks in South East Europe, to close the infrastructure gap that isolates the region from the wider EU market.
• Strengthening cross-border interconnection capacity, with a view to price convergence in the single market, especially during peak demand periods.
• Implementation of short-term financial measures, such as taxing the “skyrocketing” profits of producers to stabilize the market and relieve consumers.
• Strengthen market coupling and regional cooperation to promote price harmonization and improve energy security across South East Europe.
• It is highlighted that the letter to the EU Energy Commissioner is accompanied by a joint technical memorandum developed by the three countries, together with a note from the respective Transmission System Operators, which describes the main factors that have led to the price increase.

The three countries believe that coordinated action, at EU level, is necessary to address the challenges and ensure the resilience of the energy market in the region.

Greece, Romania and Bulgaria are committed to working closely with the European Commission to implement these critical measures and promote a more secure, efficient and affordable energy future.

Source: OT