Some, like France and Spain, have been calling since the fall of 2021 for an in-depth reform of the electricity market, in order to allow households and businesses to benefit from the relatively low production costs that nuclear or renewables can offer. Others, in the forefront of which Germany, more dependent on gas, advocated the greatest caution, arguing that it is dangerous to touch well-established market mechanisms and that the priority must remain the security of supply , faced with the question of prices.
For a long time, the European Commission preferred to do nothing, choosing, in fact, the camp of the conservatives. But soaring energy prices and the return of inflation on the Old Continent, with the associated risks of social unrest, have moved the cursor. Especially since the Europeans were also looking for a response to the American Inflation Reduction Act, which provides 369 billion dollars (344 billion euros) in subsidies for green industry, including a large envelope for energy.
The electricity market reform proposal finally presented by the community executive on Tuesday, March 14, is far from being the Big Bang that Paris and Madrid have long demanded. But it gives them important guarantees since, beyond renewables, it encourages investment in nuclear power, including in existing power plants, and outlines an institutional framework in which Member States can resort, in the event of a crisis, to regulated tariffs for households and SMEs.
Setting prices for decarbonized energy
In the short term, it is not certain that this reform project will significantly reduce electricity bills. The Commission’s proposal in fact perpetuates the way in which megawatt-hour prices are set on a day-to-day basis and which, as we have seen, has not protected consumers against galloping inflation. On the other hand, it saved them from supply disruptions when Russia decided to cut off the gas tap for Europeans.
In this context, the vast majority of the Twenty-Seven wished to maintain the functioning of « court terme » of the market which, being highly interconnected, makes it possible to respond to demand peaks on a continental scale without disruption of supply. Today, it is the last power station called to meet consumption, most often a gas-fired power station, which determines the price of electricity. From this point of view, Emmanuel Macron, who had called for “decoupling”, arguing that the French should be able to take advantage of the relatively low cost of nuclear power produced in their country, was unsuccessful.
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