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With electricity prices at record highs, some European governments have implemented national measures to protect their own domestic households and businesses.
But so far, these have been largely “uncoordinated and have prioritised national security over cooperation,” think tank Bruegel warned in a paper published on Tuesday (6 September).
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This could “undermine the goal of calming energy markets,” the authors write, adding that “cross-border electricity exchanges are the centrepieces of Europe’s energy system.”
In June, the Spanish government announced a subsidy scheme for gas and coal-fired power plants.
This has kept electricity bills comparatively low in the country, but since then, gas flows from Spain to France have been 30-percent lower than in the same period last year.
“While such policies may gain the support of voters, isolated power systems tend to result in higher prices for consumers who cannot benefit from cheap electricity from their neighbours,” the study’s authors, including Bruegel senior fellow Simone Tagliapietra, wrote.
The paper instead encourages member states to strike a “grand energy bargain” together to solve the crisis and not move alone. Power-sharing and bringing down demand should be central to such a plan, they write.
The European Commission is currently working on a plan to reform of the electricity market, but the plan is not ready yet.
Meanwhile, European energy ministers are set to meet in Prague on Friday. But. according to an EU diplomat speaking on the basis of anonymity, it is “unlikely” ministers there will agree on a single EU-wide plan.
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