It is unclear what German Chancellor Olaf Scholz and French President Emmanuel Macron said to each other during their meeting in Hamburg on October 9 and 10. But their exchanges seem to have made it possible to unblock a file which, for months, had seen Berlin and Paris clash with no prospect of compromise: just ten days ago, the reform of the European electricity market indeed seemed very bad. committed, as Paris and Berlin diverged. “Germany saw that it was in the minority”, confides a European diplomat.
Still, on Tuesday October 17, European energy ministers, meeting in Luxembourg, reached an agreement on this text, which aims to limit price volatility and encourage investments in energy decarbonized.
“It’s a French victory”, insists the Elysée. It is true that France – but also Spain – has been calling for reform for two years, in order to allow households and businesses to benefit from the relatively low production costs that nuclear or renewables can offer.
Others, led by Germany, much more dependent on gas, did not wish to tamper with well-established mechanisms which ensured security of supply. But the war in Ukraine and the return of inflation on the Old Continent have moved the cursor. The need to respond to the American Inflation Reduction Act, which provides $369 billion (€350 billion) in subsidies for green industry and widens the competitiveness gap between American and European companies, has also given rise to arguments for reform.
On March 14, the European Commission ended up making a proposal, which served as the basis for the text that the Twenty-Seven have just adopted almost unanimously – only Hungary abstained.
Long months of battle
This does not affect the functioning of the market, which is highly interconnected, which makes it possible to respond to peaks in demand across the continent without disruption of supply. It is always the last power plant called to respond to consumption, most often a gas power plant, which determines the price of electricity. But the Twenty-Seven now encourage the use of long-term contracts between low-carbon energy producers on the one hand and industrialists or the State on the other. The key is prices fixed in advance, which allow consumers to smooth their expenses and offer suppliers predictable income.
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