Energy prices - How can we keep energy affordable?

Cem Başar
Enel X
Philipp Cüppers
Vattenfall Hydro Germany
Wilhelm Appler
Silvana Tiedemann
Hertie School

Wholesale electricity prices varied as much as 77€/MWh to 624€/MWh within a 7-hour period in August. In this gridXdays panel, we discussed how consumer incentives can align electricity consumption with the needs of the system and the market. Energy market design must be adapted accordingly to take new and constantly changing challenges into account.

Listen to regulatory and energy economic experts discuss how we can keep energy affordable in this gridXdays panel. From smart meter rollouts to temporary revenue caps, methods for leveraging fluctuating prices to flaws in European electricity market design, they discuss how the energy industry can innovate and work together to pass on cheaper prices to consumers. Hear from , ,  Wilhelm Appler, Business Development & Regulatory Affairs at gridX, and Silvana Tiedemann, PhD Researcher at the Hertie School and Board Chair at Möckernkiez.

Cem Başar, Head of Global Business Development and Demand Response Solutions at Enel X believes that high energy prices don't necessarily mean that the current energy market design is inherently flawed. "The current market is working well, it's not perfect but it is working well in terms of providing incentives for more renewables in the system. It certainly should be improved in terms of valuing flexibility more by giving better signals like locational level and becoming more granular, which is something that is already happening through intraday continuous markets," he says. Such long-term solutions would act as safeguarding mechanisms to protect consumers by allowing them to leverage higher prices and prevent such drastic spikes from happening again in the future.

Philipp Cüppers, Team Lead Energy Markets and Asset Optimisation at Vattenfall Hydro Germany, adds, "we will be less in the need to help people if they can just participate. If you just get paid more for your PV at home because the prices are high, you probably need less subsidy because your prices are higher. So it's all an interconnected system and we need to think in an interconnected way much more."

Wilhelm Appler, responsible for Business Development and Regulatory Affairs at gridX, thinks that we need to start with the basics of digitizing energy. "I think the most pressing problem is the smart meter rollout, as in almost half Europe of the European countries the smart meter rollout hasn't started yet," he says.  "The nordics, Italy and have their rollout completed – almost every household has a smart meter – but countries like Germany for example still are in the stone age energy wise." From this we can develop more sophisticated digital solutions that empower end users to become more self-sufficient and lower their energy bills.

Silvana Tiedemann, PhD Researcher at the Hertie Institute notes that we should distinguish between two different time frames. "The first question is how do you make short-term price signals and volatility visible to the end consumers so they can adjust demand by shifting loads." The second focuses on removing the long-term price risk of renewables. Therefore, energy market design must factor in "short-term volatility and the principle for now, which is needed for the general response, and at the same time provide some hedging to make sure we don't have any long-term problems in terms of electricity basis," she says.

The speakers note that the complexities around energy market design will take a long time to understand and resolve, but with innovative technology, clearer standards across regions and ongoing collaboration between players, clean electricity will become cheaper and more stable.