The first results on the price front seem to be brought about by Berlin’s change of attitude, which now also calls for the imposition of a cap on natural gas, a request which, with a delay of several months, is also being considered by the Commission. Germany’s public admission in the face of the risk of irreparable damage to the country that the problem requires a single European solution and the fact that although it previously raised a wall to the proposals of the European South, it now seems to agree with them, combined with the mobility at the level Commissions, are already reflected in the energy exchanges.
While one would have expected, yesterday’s news of the new interruption of Russian flows through the Nord Stream under the pretext of the need for its maintenance, to jump the prices, they, not only did not increase, but also retreated. From the record set by the TTF on August 26, reaching 346 euros per megawatt hour, yesterday the Dutch stock market closed at 239 euros, i.e. 31% lower in a week, a decrease that is also reflected in today’s wholesale electricity prices across Europe. They stand at 635 euros in France, 571 euros in Germany, 661 in Italy and 582 in Greece (around 100 euros below Wednesday) and Bulgaria.
No one ignores the volatility of the markets and the possibility that a “negative” news could trigger a new rally. However, the restraint of prices, in the face of the expectation of taking measures on behalf of the E.U. it is recorded as an important development, with the European leaders doing everything they can to keep the above climate alive, as was also seen from yesterday’s statements by Soltz.
On the sidelines of the announcement of the new relief package with which the federal government intends to support citizens and businesses, the German chancellor said “I believe that we will soon see changes at the European level as well”, adding that “not only Germany is suffering, the reservations have now dissipated and everyone wants it”. It was preceded by statements from Finance Minister Christian Lindner (FDP) that the government will adjust the electricity market regulations.
It is currently unclear how soon any decisions will be made. The agenda of the emergency meeting of energy ministers on September 9 has not yet been announced, this will happen a week before the meeting. It is therefore early for assessments as to which of the three scenarios that the EU is considering will be adopted. However, the fact that concrete measures are now on the EU table, as Energypress wrote yesterday – the cap on gas à la Spanish and the withholding of surpluses on electricity ala Greek – but also that the German Minister of Finance himself informed his European counterparts in a written message that Berlin is willing to consider imposing a ceiling on the price of gas, says a lot. The same applies to the fact that the once inflexible South’s appeals, the Commission’s Gas coordination group in which regulators from all EU countries participate, included three proposals in its letter to the member countries, namely the disconnection of the electricity from the price of natural gas (Greek model I), the temporary mechanism for recalling the excess revenues of the production companies (Greek model II) and the Iberian model, the main problem of which is its enormous financing, since it was applied at a pan-European level. And this, as covering the difference between the price that would be set as a ceiling for natural gas available for power generation and the import price would have to be covered either by funds that should be allocated centrally by the EU, or by state budgets.
In the best case scenario, at the emergency meeting on September 9, the 27 energy ministers will agree on a package of emergency measures, such as some form of cap on gas, with European leaders taking the final decisions at the summit on the 6th and 7th October.
Moderate optimism prevails in the government. The news is encouraging, but it is not the first time that expectations are raised only to be denied. For now, then, the finance staff is drafting the 2023 budget and preparing to announce benefits for next year amid a murky landscape. The answer to the question, at what price of natural gas should the next year’s budget be drawn up, remains unknown. If, however, a pan-European solution is agreed upon in the next period of time, such that it frees up part of the available fiscal space for other interventions, beyond electricity, it is obvious that the data will change, giving important political breaths to the government in a difficult situation for it.