The European Commission proposed this Wednesday a mandatory temporary reduction of 5% of electricity consumption in peak hours, which are more expensive, and 10% of demand in general, in order to reduce gas prices.
“The first response to deal with high prices is to reduce demand, which can affect electricity prices and have a general calming effect on the market. To target the most expensive hours of electricity consumption, when gas of electricity production has a significant impact on the price, the Commission proposes the obligation to reduce electricity consumption by at least 5% during selected peak price hours”, announced the institution in a statement released today.
Specifically, “the Member States will be obliged to identify the 10% of the hours with the highest expected price and to reduce demand during these peak hours,” he adds.
In addition, Brussels wants “member states to aim to reduce global electricity demand by at least 10% by March 31, 2023,” the press release says.
According to the European Commission’s proposal on this emergency intervention to deal with high energy prices, to which the Lusa agency had access, the idea will be to impose a mandatory reduction target to “specifically target the most expensive hours electricity consumption, when gas generally sets the marginal price”.
The European Commission then proposes “a mandatory reduction target of at least 5% in gross electricity consumption during selected peak price hours, covering at least 10% of the hours each month in which it is expected that prices are the highest,” according to the proposal.
The institution explains that “this mandatory objective would result in the selection, on average, of three to four daily hours of work, which would normally correspond to peak load hours, but may also include hours in which the production of electricity from renewable energies is low and that the production of marginal plants is necessary to cover the demand”.
Data from the institution show that a reduction of 5% during the 10% of the hours of greatest electricity demand would lead to an estimated decrease in gas consumption of around 1,200 million cubic meters in a period of four months, which at final would represent about 3.8% of gas consumption for energy.
It will be up to the Member States to implement measures to reduce the total consumption of electricity by all consumers, which may include information and communication campaigns directed at consumers, but also “economically efficient and market-based measures, such as auctions or schemes Bidding”. for the response on the demand side or the electricity not consumed”, lists Brussels.
This may include existing schemes or national incentives to develop demand response, but also financial incentives or compensation to market participants, exemplifies the community executive, pointing out that “the introduction and implementation of such measures must not prejudice the application of the rules in the state help.
In the current configuration of the European market, gas determines the global price of electricity when it is used, since all producers receive the same price for the same product — electricity — when it enters the network.
There has been a consensus in the EU that this current model of marginal prices is the most efficient, but the acute energy crisis, exacerbated by the war in Ukraine, has sparked debate.
As the EU relies heavily on fossil fuel imports, in particular gas from Russia, the current geopolitical context has caused volatility in electricity prices.
Source: TSF
