EU planning €200/MWh price cap on non-gas generated electricity - report

Brussels is reportedly planning a €200 a megawatt hour limit to the price of electricity generated by non-gas power producers as part of efforts to quell the EU’s energy crisis.

According to the Financial Times, which has seen a draft of proposals, the European Commission is recommending member states cap the price of electricity from producers such as wind farms, nuclear and coal plants, all of which are set by the high price of gas, at €200 a MWh. The current spot price for electricity in Germany, the regional benchmark, is above €450 a MWh.

Such a cap would mimic "the market outcomes that could be expected were global supply chains functioning normally and not subject to the weaponisation of energy through gas supply disruptions", the commission said. It said the cap should be high enough so as not to discourage future investment in non-gas producing technologies.

The FT also said the document suggests a mandatory target of reducing electricity consumption by 5% during peak pricing hours - something that commission president Ursula von der Leyen put forward in prepared remarks seen by the FT on Tuesday.

It was understood the proposals will be discussed by diplomats from the EU’s 27 member states on Wednesday ahead of an emergency meeting of energy ministers on Friday.

The FT said several member states have complained that Brussels has not acted fast enough. Some, including Spain and Italy, have pushed for the commission to decouple gas and electricity markets.