Europe’s Imperfect Options for Transforming Its Energy Markets
- Bloc seeks to decouple power prices and expensive natural gas
- Reform could worsen supply crunch if not done correctly
This article is for subscribers only.
The European Union is hoarding natural gas to make it through the winter, but it’s also trying to solve a bigger problem: breaking the link between gas and power prices altogether.
Currently, the most expensive form of generation -- gas -- sets the price for all electricity that’s sold into the market. That means consumers are bearing the brunt of Russia’s supply cuts to the continent. It also means Europe isn’t feeling much of the benefit of low-cost renewables like wind farms, which get to sell at big margins.