(Bloomberg) -- Greece, Romania and Bulgaria want to tax the windfall profits made by low-cost energy producers to combat what they say is a decoupling of power prices in the European Union.
The three nations say energy costs in their region surged this past summer — in some cases doubling — and are growing increasingly divergent from their local neighbors, according to a document seen by Bloomberg News. That “market failure” has had several negative effects, including the windfall profits and downbeat signals for investment in generation capacity.
While long-term solutions such as more storage, interconnectors and better demand response measures are needed, the tax would help in the short term, the countries say. The levy — similar to one implemented during the energy crisis — should be allowed when there’s an increase in wholesale power prices of at least 50% within three months and a “significant weakening in market coupling.”
“The extreme price volatility observed during the summer of 2024 has placed significant strain on our economies, threatening both energy security and market stability across the region,” ministers said in a letter to EU energy commissioner Kadri Simson seen by Bloomberg. “We believe coordinated action at the EU level is essential to address these challenges and ensure energy market resilience in the region.”
Bringing down energy prices is a priority for EU leaders amid fears of losing part of the industrial base. Former European Central Bank President Mario Draghi said in a report on the bloc’s competitiveness that improving grids was one of the most important tasks.
Eurelectric SA, the EU electricity lobby, said Thursday that volatile power prices were harming investments and forcing industries abroad. Alongside high energy costs, Europe has also seen 1,031 hours of negative power prices this year through August due to large amounts of solar generation hitting the network and grids being unable to cope.
“This is unprecedented,” said Kristian Ruby, secretary-general of Eurelectric. “It’s making the business case for new generation more complicated.”
Greece, Romania and Bulgaria will raise the issue when energy ministers meet in Luxembourg on Oct. 15.
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