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Europe’s Next Energy Battle Is to Keep Markets Working

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Welcome to the Brussels Edition, Bloomberg’s daily briefing on what matters most in the heart of the European Union.

Beyond fears of energy rationing and wild price spikes, EU energy ministers on Friday will also confront the risk of energy markets breaking down. Several hundred local German utilities are coming under strain and need support, according to the head of the country’s largest energy lobby group. Aside from fanning inflation, the crisis is sucking up capital to guarantee trades amid wild price swings. European energy trading is being strained by margin calls of at least $1.5 trillion, putting pressure on governments to provide more liquidity buffers, according to Norway’s Equinor. Countries like Sweden and Switzerland are already acting to prevent a “Lehman” moment, as power companies face sudden cash shortages. Spain’s deputy prime minister Teresa Ribera said the EU should take action to ease liquidity woes utilities are currently facing, suggesting a clawback mechanism like Spain uses to curb power costs.