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EC won’t request winter power demand cuts due to softer gas


05 Jun 2023 15:10




05 Jun 2023 15:10

(Montel) The European Commission will not propose more emergency power demand cuts at EU level for next winter given the fall in prices, it said in a report on the bloc’s electricity crisis measures released on Monday.

According to market expectations, “the electricity price spikes observed throughout 2022 are less probable to occur in the upcoming winter”, said the EC.

These expectations were based on the relatively higher gas storage levels, reduced demand for gas, and more pipeline and LNG infrastructure available this winter.  

Record high gas prices in 2022 helped wholesale electricity prices spike to more than EUR 350/MWh in August in the main EU power markets, compared to the average of EUR 40-60/MWh between 2010 and 2020, as gas-fired peaking plants set marginal power prices. 

But a combination of mild weather and policy measures including gas and power demand reductions had helped improve the supply/demand balance. At the end of May, the benchmark German front-month product was around EUR 80/MWh.

The market also expected more nuclear and hydropower availability this year compared to last, which would also help to keep power prices lower going into winter than in 2022, said the EC.

Peak power demand cuts

Most EU countries managed to cut their peak hour electricity demand by 5% last December compared to a reference period, according to the EC report. The EU had agreed last October to a binding target to cut peak demand by at least 5% from 1 December until 31 March. 

However, several EU countries reported that a voluntary target to cut overall monthly power demand by 10% compared to the last five years had been more challenging. They cited factors such as the weather and using more electricity instead of fossil fuels. 

More demand-side rules
The EU was also working on rules intended to boost demand-side response, reducing the need for specific emergency EU-level targets, said the EC. 

These included the EC’s proposed market design reforms, which would require EU countries to assess their specific needs for power system flexibility, including demand-side response, and set goals to ensure they meet them. 

They EC urged grid operators to develop a peak shaving product to help reduce peak demand and shift it to periods with higher renewable power availability. 

There was also ongoing work to draft a new EU network code for demand response, which was expected to include binding rules on aggregation, energy storage and demand curtailment. 

This would help boost demand-side response in all markets, said the EC.

Updates story to clarify the report’s details on wholesale EU electricity prices.

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