Six flaws in the EU Electricity Emergency Tool and how to fix them
Ingmar Schlecht, Lion Hirth and Christoph Maurer lay out their assessment of the European Commission's proposal for what it calls an electricity emergency tool – a mechanism to claw back windfall profits from power generators and use the money to support electricity consumers.
Ingmar Schlecht is a research associate at ZHAW Winterthur and director of the consulting firm Neon Neue Energieökonomik. Lion Hirth is a professor of energy policy at the Hertie School in Berlin and director of Neon. Christoph Maurer is the director of the consulting firm Consentec.
Since its first announcement, the idea of a clawback mechanism has been heavily debated. The feasibility of such an instrument was questioned, given the complexity of the European power market.
Contrary to popular opinion, this market does not only comprise the coupled day-ahead auction on power exchanges but other short-term markets like intraday and balancing markets, over-the-counter trading, and a whole range of long-term financial markets.