The UK government, too, has published its Energy Prices Bill, which aims to reduce the impact of gas costs on electricity prices and controversially includes measures to cap revenues from renewable generators. You can read our analysis of the EPB here.
Looking further ahead, adding more renewable capacity and scalable reserves such as nuclear – as the U.S. is trying to do via the Inflation Reduction Act – will both improve security of supply and help mitigate future price shocks.
It is, though, an unavoidable truth that our electricity pricing model needs to change. The current approach was developed decades ago for a world of centralised supply and cheap gas. Today electricity comes from a diverse range of sources with gas no longer the obvious benchmark, and so the market must be redesigned to better reflect this reality.
Long-term market reforms on the horizon?
In the EU, discussions on longer-term reform of the electricity and gas markets have only recently begun. Things are more advanced in the UK, where the government is consulting on a new model via the Review of Electricity Market Arrangements (REMA).
Here, options on the table include decoupling the price of electricity and gas, allowing consumers to opt for cheaper renewable power and only pay for more expensive gas-fired electricity during periods of peak demand.