Proposed changes could lead to undesirable consequences, such as more power system costs and emissions, he writes in Euractiv.
Following a European Union Energy Council meeting last Tuesday, Hertie School Professor of Energy Policy Lion Hirth comments on a proposal made by Greece to decouple electricity prices from soaring gas prices. In an op-ed published in Euractiv on 28. July, Hirth and his colleagues Christoph Maurer and Ingmar Schlecht write that “the proposal would be the end of electricity markets as we know them.”
Hirth and colleagues outline what they see as the fundamental flaws of the proposal, emphasising the concern that it would lead to the effective end of electricity markets where price signals guide dispatch and investment. They outline how the proposed changes could lead to undesirable consequences, such as increasing power system costs, increasing emissions, and reducing incentives for consumers to save energy.
“The proposal would probably be the most fundamental reform of electricity markets since liberalization,” the authors write. “It would effectively end market-based renewables, demand-side flexibility, and dispatch signals for nuclear and cogeneration plants.”
The full article is available here.
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Lion Hirth, Professor of Energy Policy