After months of deadlock, the European Union could soon find an agreement on the coveted deal European gas price ceiling, proposed and supported by the Prime Minister, Mario Draghi, who a few days after his farewell at Palazzo Chigi could achieve a historic result for our country.
The acceleration on the price cap came yesterday, Monday 29th August, when Germany he informally let it be known that he had changed his mind and put aside those doubts that until recently had blocked a regulation considered fundamental by Italy. From there, there has even come to talk of a structural reform of the electricity market which also includes decoupling (decoupling) of the price of gas from that of energy on the wholesale markets.
"We must do a structural reform wide-ranging electricity market”, said the president of the EU Commission Ursula von der Leyen speaking at the Ministry of Economy in Berlin. “We need an emergency tool that acts faster. We are talking about weeks,” she added.
These measures will be discussed in Council of Energy Ministers scheduled for Friday 9 September. The aim is to immediately find an agreement and approve everything in a few days.
The soaring price of gas
Since the beginning of the Russian invasion of Ukraine, the price of gas has reached unprecedented levels. The peak was reached on August 26, when i 343 euros per megawatt hour in the Title Transfer Facility (TTF), the main market for commodity trading. A year ago it was six times lower.
Yet the first signs of opening up by Germany on the European price cap were enough to bring the price of gas down to 272 euros in yesterday's session. On the Amsterdam Stock Exchange, gas travels today at 255 euros per megawatt hour.
As the Financial Times, on August 29 the price of a megawatt hour exceeded one thousand euros in the German market, a value ten times higher than the average historical past ten years.
How does the price cap work on the price of gas?
The proposal formulated by Premier Draghi plans to establish a ceiling on the price of gas imported and used in the production of electricity. An expected decision, but so far never approved due to the fear (especially German) that in response Russia may decide to shut off the gas supply altogether, which is currently already traveling at 20% of its potential. But the repeated interruptions established in recent months by Moscow (the last one will start tomorrow) and the crisis that is affecting companies throughout Europe seem to have convinced even the most "prudent" countries to play it all.
In fact, according to many countries, imposing a price cap could, if not solve, at least mitigate the problem of prices that have become unsustainable, with positive repercussions on households and businesses.
What is Decoupling?
Another important proposal that will be discussed in the coming days will concern the decoupling (decoupling) between the price of electricity and that of gas. This system was developed in the XNUMXs, in conjunction with the process of liberalization of the European energy markets. It has worked well for decades, providing affordable energy and making coal more expensive in order to encourage its disposal.
It essentially works like this: when demand reaches a certain level, electricity is sold at price of the last trade made on the market. Since electricity produced through natural gas is the most expensive, the price of electricity is linked to the price of gas. However, the surge in prices blew everything up, making decoupling necessary.
