https://sputnikglobe.com/20221026/brussels-reportedly-fears-subsidizing-cheap-power-fraught-with-export-leaks-to-non-eu-markets-1102664571.html
Brussels Reportedly Fears Subsidizing Cheap Power Fraught With Export Leaks to Non-EU Markets
Brussels Reportedly Fears Subsidizing Cheap Power Fraught With Export Leaks to Non-EU Markets
Sputnik International
Amid the rocketing price of gas, which is pivotal to both electricity generation and heating, European Union and UK ministers have been frantically searching... 26.10.2022, Sputnik International
2022-10-26T13:11+0000
2022-10-26T13:11+0000
2022-11-15T14:17+0000
european union (eu)
energy
cost of living
european commission
energy crisis in europe
gas
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Subsidizing electricity across the European Union to slash energy bills on the continent during the cost of living crunch could result in a flood of cheap power exported to non-EU countries, the European Commission officials have reportedly warned. Furthermore, under the subsidy, gas demand is predicted to surge to between 5 and 9 billion cubic meters (bcm), the Commission said in a working document cited by a British news outlet. As the EU ministers wrangle over a suggested move to cap the cost that can be charged for electricity from gas-fired power generators, the EU bloc’s executive arm is cited as highlighting the possible negative fall-out from the measure.Their concerns reportedly rest on the possibility that subsidized electricity could go, for example, to the UK or Switzerland, thus boosting consumption of natural gas needed to generate the power. The officials were also cited as fearing that the move, which presupposes EU states compensate gas-fired power plants for the difference between the real market price and the capped price, could result in some member countries benefiting more than others.Gas Cap Hurdle The so-called "Iberian model", introduced this year by Spain and Portugal, is a state aid program covering, in part, high costs of gas used to produce electricity. The Commission first greenlighted the Iberian exception on 8 June. The model allowed Spain and Portugal to drive down wholesale electricity prices artificially. This was achieved by capping the price of gas used for electricity generation, presupposing a direct payment to gas-fired generators. This compensation was to cover the difference between the wholesale price of gas and the cap limit. The cap is set at €40/MWh ($40) during the first six months, and is lifted by €5/MWh monthly until 31 May 2023. Both Madrid and Lisbon pointed to the fact that the Iberian peninsula had a relatively low interconnection with the rest of the bloc.Extending this measure to the entire 27-member EU has left the ministers split over the contentious model, which results in lower power bills for consumers and companies.EU states such as Germany, the Netherlands and Italy, that rely on gas for electricity production, would face the highest costs of necessary subsidies in line with the model. Commission officials allegedly estimated that Eastern, Nordic and Baltic countries might face fewer benefits from the measure. On the other hand, France, that trades in renewable and nuclear energy and buys electricity made from gas from Germany, would be "the biggest beneficiary" of the Iberian scheme, the Commission is cited as ruling.To avoid cheap, subsidized power "leaking" into the export market outside the bloc, the Commission is reportedly considering either extending the scheme to the UK or, alternatively, applying the price cap only in the EU, exporting electricity at a higher price than in domestic trade. But many of the EU's present trade agreements, including the Brexit deal with the UK, “prohibit the creation of higher export prices”, the working document reportedly stated.As European ministers met on Tuesday to tussle over various options to deal with the energy crisis as winter draws near, Jozef Sikela, Czech industry minister, was cited as saying:As the bitter energy crisis, accelerated by self-damaging packages of western sanctions enacted against Russia because of its special military operation in Ukraine, continues to feed into the prospect of energy shortages and staggering household bills for consumers, so the fractures within the EU bloc appear increasingly evident.During their recent summit in Brussels, EU leaders also failed to agree on the issue of the Russian gas price cap. Despite mentioning the idea of introducing a cap on the price of Russian gas as part of the sanctions imposed on Russia, western leaders have yet to implement this move. In response, Moscow has vowed not to sell gas to any buyer who would try to impose a price cap.
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https://sputnikglobe.com/20221022/why-eu-leaders-cannot-agree-on-russian-gas-price-cap-1102512685.html
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european union (eu), energy, cost of living, european commission, gas
european union (eu), energy, cost of living, european commission, gas
Brussels Reportedly Fears Subsidizing Cheap Power Fraught With Export Leaks to Non-EU Markets
13:11 GMT 26.10.2022 (Updated: 14:17 GMT 15.11.2022) Amid the rocketing price of gas, which is pivotal to both electricity generation and heating, European Union and UK ministers have been frantically searching for measures that could tame prices, which are relentlessly driving the cost of living crisis.
Subsidizing electricity across the European Union to slash energy bills on the continent during the
cost of living crunch could result in a flood of cheap power exported to non-EU countries, the European Commission officials have reportedly warned.
Furthermore, under the subsidy, gas demand is predicted to surge to between 5 and 9 billion cubic meters (bcm), the Commission said in a working document
cited by a British news outlet. As the EU ministers wrangle over a suggested move to cap the cost that can be charged for electricity from gas-fired power generators, the EU bloc’s executive arm is cited as highlighting the possible negative fall-out from the measure.
“The effectiveness of the measure as regards both lowering electricity prices and avoiding additional gas consumption is highly dependent on the extent to which increased flows of subsided electricity to non-EU countries can be avoided,” the Commission officials purportedly stated.
Their concerns reportedly rest on the possibility that subsidized electricity could go, for example, to the UK or Switzerland, thus boosting consumption of
natural gas needed to generate the power. The officials were also cited as fearing that the move, which presupposes EU states compensate gas-fired power plants for the difference between the real market price and the capped price, could result in some member countries benefiting more than others.
25 October 2022, 10:26 GMT
The so-called "Iberian model", introduced this year by Spain and Portugal, is a state aid program covering, in part, high costs of gas used to produce
electricity. The Commission first greenlighted the Iberian exception on 8 June.
The model allowed Spain and Portugal to drive down wholesale electricity prices artificially. This was achieved by capping the price of gas used for electricity generation, presupposing a direct payment to gas-fired generators. This compensation was to cover the difference between the wholesale price of gas and the cap limit. The cap is set at €40/MWh ($40) during the first six months, and is lifted by €5/MWh monthly until 31 May 2023. Both Madrid and Lisbon pointed to the fact that the Iberian peninsula had a relatively low interconnection with the rest of the bloc.
Extending this measure to the entire 27-member EU has left the ministers split over the contentious model, which results in lower power bills for consumers and companies.
EU states such as Germany, the Netherlands and Italy, that rely on gas for electricity production, would face the highest costs of necessary subsidies in line with the model. Commission officials allegedly estimated that Eastern, Nordic and Baltic countries might face fewer benefits from the measure. On the other hand, France, that trades in renewable and nuclear energy and buys electricity made from gas from Germany, would be "the biggest beneficiary" of the Iberian scheme, the Commission is cited as ruling.
To avoid cheap, subsidized power "leaking" into the export market outside the bloc, the Commission is reportedly considering either extending the scheme to the UK or, alternatively, applying the price cap only in the EU, exporting electricity at a higher price than in domestic trade. But many of the EU's present trade agreements, including the Brexit deal with the UK, “prohibit the creation of higher export prices”, the working document reportedly stated.
As European ministers met on Tuesday to tussle over various options to deal with the energy crisis as winter draws near, Jozef Sikela, Czech industry minister, was cited as saying:
“Time matters and we have to be fast. The game is not over and the winter is coming.”
22 October 2022, 07:00 GMT
As the bitter energy crisis, accelerated by self-damaging packages of
western sanctions enacted against Russia because of its special military operation in Ukraine, continues to feed into the prospect of energy shortages and staggering household bills for consumers, so the
fractures within the EU bloc appear increasingly evident.
During their recent summit in Brussels, EU leaders also failed to agree on the issue of the Russian gas price cap. Despite mentioning the idea of introducing
a cap on the price of Russian gas as part of the sanctions imposed on Russia, western leaders have yet to implement this move. In response, Moscow has vowed not to sell gas to any buyer who would try to impose a price cap.
25 October 2022, 11:55 GMT
