Commenting On Price Cap Plans
With the European Commission having called an Extraordinary Energy Council meeting, Nord Pool has some concerns around the Commission’s proposal to establish a price cap for inframarginal technologies in coupled electricity markets.
While it is reassuring that the Commission ruled out disruptive measures such as full market suspension, as a leading European energy market we feel well placed to warn that a poorly designed inframarginal cap could unfairly penalise generators which have already entered forward hedging / PPA / OTC contracts.
These bind them to receiving a price substantially lower than that of current spot market prices. Any cap would need to be calculated on well-defined criteria founded on hard data, rather than broad and imprecise assumptions.
We believe that implementation of an inframarginal cap is possible, with a well-designed portfolio bidding structure. Read more here.