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European energy crisis: the problem is not the design of the electricity market, but bureaucratic obstacles – Aquila Capital

There is extensive political discussion about whether the design of the electricity market in Europe is outdated. But in a market which, from an economic perspective, follows a clear framework and the generally valid rules of the scarcity of goods, a one-dimensional view leads to doubtful conclusions.

Posted on Nov 09, 2022

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... After the proposal of the EU Commission to introduce a 'clawback mechanism' on revenues above 180 EUR/MWh for inframarginal technologies (including renewables) integration into national law is of fundamental importance for the economic development of the European energy supply. Paradoxically, the public and political debate on renewable energies has turned away from the perspective of the enormous costs of the energy transition, to the assumption that 'extremely cheap' electricity producers make disproportionate profits due to market design, which bear no relation to the entrepreneurial risk taken.

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