15.11.2021

ACER submits to the European Commission its Preliminary Assessment of Europe’s high energy prices and the current wholesale electricity market design

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Cover page ACER preliminary assessment on high energy prices

ACER submits to the European Commission its Preliminary Assessment of Europe’s high energy prices and the current wholesale electricity market design

What is it about?

The EU Agency for the Cooperation of Energy Regulators (ACER) today submitted to the European Commission its Preliminary Assessment of Europe’s high energy prices and the current wholesale electricity market design.

The European Commission, in its “toolbox” Communication of 13 October 2021, tasked the Agency with carrying out an assessment of the current wholesale electricity market design by April 2022, and providing a preliminary assessment by mid November 2021.

What’s in ACER’s preliminary assessment?

The ACER Preliminary Assessment complements the analysis already presented in ACER’s Note on the High Energy Prices, published in October.

The Agency’s Preliminary Assessment:

  • provides some key factors for the relatively uneven electricity price impacts across Member States, and shows how countries with high gas dependency and low interconnectivity were more exposed to high electricity prices;

  • looks at how the move towards more spot pricing of gas in Europe (rather than long-term contracts) has yielded significant benefits over the past decade and how this relates to price volatility issues going forward;

  • includes key characteristics of the current electricity market design, adding ACER’s initial perspective on certain price volatility issues, and (in light of the current political debates) on alternative market design approaches including the notion of possibly decoupling electricity market outcomes from gas price dynamics through price caps or technology-dependent average prices;

  • adds the latest data and analysis from ACER’s energy market monitoring on related dynamics in the European electricity market; and

  • provides an initial outline of ACER’s upcoming April 2022 assessment.

What to expect in the ACER April 2022 assessment?

In its broader assessment due in April 2022, ACER will provide an analysis of:

  • the benefits and drawbacks of the current wholesale electricity market design and related matters;

  • the issue of sufficient revenue certainty in electricity markets in view of the massive  investment needs up ahead; and

  • the options for cushioning or shielding end-consumers from perceived excessive levels of price volatility that impact affordability.

What’s next?

ACER will hold a workshop with stakeholders in the first half of February 2022.

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Access the Preliminary Assessment of Europe’s high energy prices and the current wholesale electricity market design.