The president of the European Union says the bloc is urgently working on a plan to get power prices, soaring for months now due to fallout from Russia’s invasion of Ukraine, under control.
Ursula von der Leyen made the comments at a speech at the Bled Strategic Summit in Slovenia on Monday. “The skyrocketing electricity prices are now exposing the limitations of our current market design. It was developed for different circumstances. That’s why we are now working on an emergency intervention and a structural reform of the electricity market,” she tweeted.
Von der Leyen didn’t include any details in her comments, but the speech coincided with a fresh record for European benchmark German power prices for 2023, which soared past €1,000 ($993) on Monday. French prices reached that high on Friday.
She said the region needs a “new strategic thinking to defend the rules-based order,” and that should start with ending dependency on Russian fossil fuels, which the bloc has been racing to do ahead of winter.
“Our increased need for other raw materials must not create new dependencies. We must diversify supply and build ties with reliable partners,” she added, noting she will be in Canada in two weeks to help advance a partnership with that country.
The Czech Republic, which currently holds presidency of the EU, has called for a Sept. 9 extraordinary meeting of energy ministers. The country’s prime minister, Petr Fiala, reportedly said Monday that “decoupling electricity prices from the cost of gas is one of the paths we can consider” to bring down soaring electricity costs.
German Chancellor Olaf Scholz last week failed to secure a promise by Canada to ship liquefied natural gas to Europe, but his country gotten an agreement from Denmark to boost offshore wind supply and hook it up to the German grid. By 2030, offshore wind capacity in the Baltic Sea is expected to supply 4.5 million European homes with electricity.
The here and now remains a problem for Europe, though after a summer of heat waves and droughts that are threatening crops and now a winter for its citizens that could mean power blackouts if countries have not set enough natural gas aside. Germany is among countries that have been cutting consumption and telling citizens to conserve energy, and the country appears to be on track to meeting its target for gas savings.
Pressure on that natural gas has weighed on electricity demands in the region, as well as in the U.K., where the energy regulator has raised the country’s price cap by 80% to £3,549 ($4,200) a year.
In the near term, Europe is facing fresh worries over another shutdown for the crucial Nord Stream 1 natural gas pipeline, due to a three-day maintenance from Aug. 31 to Sept. 2. Some are concerned that Russia may use the shutdown as an excuse not to resume flows, something that EU leaders are not discounting as they scramble to cut reliance on Moscow.
Moscow has already cut deliveries over the pipeline to 20% of maximum capacity, blaming turbine issues. Europe has accused Russia of throttling supplies to Europe as revenge for sanctions imposed over its nearly six-month invasion of Ukraine.