Brussels In view of the high energy prices, the EU countries have agreed on European emergency measures to save electricity and finance relief. The responsible ministers agreed on Friday that energy companies will in future have to hand over part of their crisis profits to the state, as announced by the Czech Council Presidency. This money is intended to relieve consumers. The agreement has yet to be formally confirmed.
Since the price of gas has risen sharply against the background of the war in Ukraine, electricity has also become more expensive. This is because the price of electricity is determined by the most expensive power plant that is switched on for production – currently these are mainly gas-fired power plants. Producers of cheaper electricity – for example from the sun, wind, nuclear power or lignite – can sell it at high prices.
In the future, your income will be capped at 180 euros per megawatt hour, as diplomats have confirmed. The surplus is intended to finance relief for citizens. Germany had supported a revenue cap.
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Federal Economics Minister Robert Habeck (Greens) said on the sidelines of the meeting that the federal government had prepared for this and that implementation could be relatively quick.
The measures will affect not only the producers of cheap electricity from renewable and other sources, but also oil, coal and gas companies and refiners. They should pay a solidarity levy of at least 33 percent on their excess profits. The money should also be used to finance relief for citizens and companies.
Mandatory electricity savings target
Representatives also approved a mandatory 5 percent power savings target during periods of high demand. Then electricity costs a lot because expensive gas has to be used for production. Overall, the EU countries should voluntarily reduce their electricity consumption by ten percent.
Electricity price: How the skimming of excess profits could look like
According to experts, there are still many unanswered questions with regard to skimming off profits. Georg Zachmann from the Bruegel Institute in Brussels says that the infrastructure of the Renewable Energy Sources Act can probably be used in Germany. “That makes it administratively relatively easy.”
However, the problem remains that electricity is sometimes bought years in advance at different prices. Such transactions should be excluded, says Zachmann. According to Lion Hirth from the Hertie School in Berlin, this is not easy. A megawatt hour of electricity is sometimes traded several times on the futures markets.
Market interventions in wholesale are extremely complicated, says Hirth. “And there is a real danger that an instrument that can work in principle and is also possible in principle will end up doing more harm than good because of one of the many difficulties in implementation.”
“I’m rather pessimistic that it will still work this year, but optimistic that it can still work this winter if everyone pulls together,” says expert Hirth. That also depends on whether the state is willing to pre-finance relief before the money is collected.
Federal Finance Minister Christian Lindner has repeatedly emphasized that he wants to stick to the debt brake. It only allows the federal government to take out new loans to a limited extent.
In principle, the economists fear that the measures will not be sufficient. “I am relatively convinced that this will not solve the problem in its entirety and that the discussions will not be over then,” says Zachmann.
The ministers also wanted to discuss an EU-wide gas price cap, as demanded by more than half of the EU countries. There shouldn’t be a decision on that yet.
Germany did not support the proposal made by Italy, France, Belgium and other countries and argued with security of supply. Habeck warned that one should not allow too little gas to come to Europe.
More: At most 15 percent more expensive and almost no taxes: This is how other countries slow down energy prices