After it was revealed that the EU may be subsidizing cheap power for Britain, plans to reduce EU energy bills have been criticized in Brussels.
Officials from the European Commission warned that low prices could lead to electricity being taken away by export markets.
Officials fear that this would violate the Brexit agreement and lead to higher export prices for Britain.
Soaring gas prices, caused by Russia’s war against Ukraine, have caused havoc on energy markets because of the central role of gas in heating and electricity generation.
Ministers from the UK and EU are trying to lower prices.
One measure in the EU is to limit the amount of electricity that can be generated by gas-fired power plants. The state would pay fuel costs in return.
This would not only lower the price of gas power stations’ output but also other generators’ output. It would also lower the clearing price on the market.
The Commission warns that there could be unintended consequences, such as an increase in the exports of power to non-EU nations.
According to the Commission, this would increase gas consumption in the EU and mean that the bloc would fund cheaper power in countries like the UK and Switzerland.
It states that the effectiveness of the measure in lowering electricity prices as well as avoiding more gas consumption is heavily dependent on how much-increased flows of subsided electricity to non-EU countries can also be avoided.
The Commission recommends that the scheme be extended to the UK, or that the price cap is applied only within the EU to stop this happening.
It warns, however, that many of its trade deals – including the Brexit agreement – “prohibit higher export prices”.
These concerns point out the immense challenges faced by politicians in trying to lower prices in cross-border energy markets.
On Tuesday, European ministers met to discuss ways to address the energy price crisis. Winter is coming.
Jozek Sikela (industry minister for the Czech Republic), said Tuesday that “time matters” and stressed the importance of speed. The Czech Republic holds the rotating EU presidency. “The winter is coming, and the game isn’t over.”
Kathryn Porter, a Watt-Logic consultant, thinks the scheme will never be implemented due to the risks and complications involved, including the need for EU gas stocks to be preserved.
She said, “We are having a warm winter, so the demand is lower than we expected.”
“But the real problem will be next summer. “Where is the gas going from to stock storage facilities?”
