Initially of this month, Russia stated it could not reopen its essential Nord Stream 1 pipeline to produce Europe – the most recent in a string of provide cuts, which Moscow blames on Western sanctions imposed over its invasion of Ukraine.
The European Fee is because of set out the EU proposals on Wednesday and governments can then thrash out the small print, probably approving them at a Sept. 30 assembly of power ministers.
Here’s what’s in a draft of the European Fee’s upcoming proposals, seen by Reuters.
WINDFALL LEVY ON NON-GAS POWER PLANTSThe draft EU proposal would claw again income from electrical energy mills that don’t run on fuel and require governments to spend the money on cushioning shoppers and business from hovering power payments.
Within the EU system, fuel crops typically set the worth of electrical energy. Non-gas fuelled energy crops promote their electrical energy on the ensuing excessive costs – despite the fact that they don’t have to pay big payments for fuel.
Brussels desires to skim off any extra income that wind, photo voltaic, nuclear and biomass crops make below this technique, in line with the draft, which may change earlier than it’s printed.
The measure would apply a worth restrict per megawatt hour on the income these mills get for his or her energy available in the market. The income cap could be utilized after energy transactions are settled, so it could in a roundabout way have an effect on costs in Europe’s exchange-traded electrical energy market, the draft stated. It could exclude revenues comprised of authorities subsidy schemes.
Coal crops wouldn’t be lined as a result of their gas prices have additionally elevated sharply this 12 months, the draft stated.
A draft of the proposal, seen by Reuters on Tuesday, included a 180 euro/MWh income restrict – decrease than the 200eur/MWh included in a earlier draft.
That may cap mills’ revenues at lower than half of present market costs. Germany’s front-year electrical energy worth hit a file excessive of greater than 1000 euros/MWh final month and is at the moment buying and selling at round 460 euros/MWh.
Trade teams say most of Europe’s wind farms usually are not reaping windfall income from excessive power costs as a result of they promote their energy below fixed-price contracts, lots of them authorities help schemes – elevating questions on how a lot cash the EU measure would increase.
PROFIT SHARING FOR FOSSIL FUEL FIRMSCompanies which have made bumper income from promoting fossil fuels at file costs could be required to make a monetary contribution to assist residents and industries grappling with sky-high payments, below the EU’s draft plans.
EU nations would introduce a short lived windfall revenue levy for oil, fuel, coal and refining corporations established within the EU. It could apply to 33% of those companies’ “taxable surplus income made within the fiscal 12 months 2022”, in line with the draft.
Nations together with Italy have already launched a windfall revenue tax on power companies. The draft stated Brussels would put in place a minimal charge for all EU nations, however governments may select to go larger.
ELECTRICITY DEMAND CUTThe draft EU proposal would impose a compulsory goal for nations to chop electrical energy consumption this winter, to make sure Europe has sufficient gas to final the colder months.
EU fuel storage is now 84% full, exceeding the EU’s pre-winter filling goal. However analysts say Europe will nonetheless must slash fuel use over winter, to keep away from storage services working dry. EU nations have already agreed to curb their fuel demand this winter – and electrical energy use could possibly be subsequent.
EU nations could be required to curb their energy use by 5% throughout the 10% of hours with the best electrical energy demand every month, the draft stated – a transfer it stated may curb fuel use within the energy sector by round 4% over a four-month interval.
EMERGENCY LIQUIDITY FOR POWER FIRMSEU nations have additionally tasked Brussels with designing “emergency liquidity devices” to assist power corporations dealing with hovering collateral wants.
Utilities promote some energy prematurely to safe a sure worth however should publish a money deposit with exchanges in case they default earlier than the facility is produced. Hovering energy costs have meant companies should publish larger margin deposits, leaving some struggling to seek out the additional money.
EU officers stated plans for emergency liquidity help have been nonetheless being drafted, and would seemingly be printed later than Wednesday. A notice printed by the Fee final week talked about some choices that EU policymakers are exploring.
“This may contain accepting a wider vary of belongings as collateral for margining goal, facilitating collateral transformation, financial institution ensures and, as a liquidity supplier, contain state assure schemes to help such liquidity mechanisms,” the Fee notice stated.
NO GAS PRICE CAPThe draft EU proposal didn’t embrace a fuel worth cap – an concept that has divided the bloc’s member states.
EU nations have requested Brussels to suggest a cap however disagree on whether or not this could apply to all imported fuel, pipeline flows or wholesale fuel buying and selling.
Germany, the Netherlands and Denmark oppose a basic fuel worth cap, warning that it may depart nations struggling to draw provides in price-competitive international markets, and endanger Europe’s winter power safety.
Italy and Poland are among the many supporters that say capping fuel costs would pull down payments for residents and industries.
The EU has additionally backed away from an earlier plan to impose a worth cap on Russian fuel. Nations together with Hungary and Austria had opposed that concept in case Moscow retaliated by slicing off the dwindling provides it nonetheless sends to the EU.
