[National Review] Energy Price-Fixing Looms over the EU
Europe’s ‘marginal pricing system’ for energy is now under severe duress. — Europe’s power sector is in a bind. Since harmonizing electricity markets in the mid 1990s, EU leaders believed that the comparatively higher price of natural gas in the wholesale market for energy would spur investment in renewables and thus aid the bloc’s transition to a net-zero-emissions economy. Indeed, the bloc’s “marginal pricing system” is designed such that wholesale electricity prices are set by the last power plant called in to meet overall demand on any given day, a role routinely played by the natural-gas power plants meeting approximately 20 percent of the EU’s electricity demand. The hope behind the pricing system was, in other words, that the forces at work in global energy markets would align with the EU’s ambitious environmental agenda.