7th September 2022
Europe is in the midst of an unprecedented energy crisis, caused by Europe’s dependency on gas. Gas prices will remain high in the next years causing hardship for residential and industrial consumers. On Friday, September 9th, European energy ministers are discussing emergency measures to deal with the crisis.
The only structural way-out of the crisis is to increase renewable energies, which are the “energy insurance of Europe”. These investment decisions need to be taken now and require stable and predictable regulatory frameworks.
Solar PV offers direct and immediate price relief to consumers, residential and industrial alike. With wholesale and retail electricity prices now going through the roof, solar presents a secure source of electricity directly accessible to consumers that will substantially lower the impact of high gas prices. Any discussion on emergency measures should include plans and support schemes to accelerate solar PV roll-out, mobilising for example the funds available under the Recovery and Resilience Facility.
Measures on windfall revenues of power generators should target actual profits only and exempt renewables that do not make windfall profits. Most solar farms are not earning the wholesale electricity price. They get a fixed price for the electricity they produce either from a government-backed support scheme or a Power Purchase Agreement (PPA) with an industrial consumer, and should therefore not be subject to windfall measures. Preliminary estimates from Germany suggests that around two-thirds of solar PV electricity is not making windfall profits. Companies exporting gas to Europe, on the other hand, are reporting historically high profits and should also be called on to contribute.
Where it is applied, the design of the wholesale electricity cap will be critical. It should be set after market clearing, be aligned at European level and be time-limited so to preserve the fundamentals and benefits of the Internal Energy Market.
Governments should also take measures to unlock demand response and combined solar and storage, as this will reduce the times gas power plants set the price. This requires governments to accelerate full implementation of the agreed Market Design legislation.
*This statement was issued in response to President von der Leyen's address on EU Emergency Energy Measures. Read the address here.