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In the first of our ECA Insight – deep dive series, Iro Sala and Frederik Beelitz look at policy responses to the unprecedented energy price spikes in Europe. We consider both, market re-design proposals and support mechanisms, to provide an overview of different approaches in tackling high prices.
Although there are plenty of factors that have resulted in a constrained power market, eg low hydro output, French nuclear shutdowns, the current situation is primarily a gas supply crisis bleeding into the power market. The policy focus should therefore be on addressing gas shortages and rebalancing Europe’s gas supply mix away from Russian gas.
In the power sector, there is a danger of hastily proposed electricity market reforms being mainly targeted at shielding consumers from high prices. These reforms may be detrimental to long-term objectives we want to see, namely providing incentives for much needed investments in low carbon, flexible and reliable supply. Any power market reform proposal should therefore be designed – not just by the guiding principle of affordability – but by considering the incentives it sets for longer term investment requirements.
You can read the full Insight here.
In ECA’s recent Insight, Robert Barnett looks at market designs being proposed to cover the case where increased penetration of near-zero variable cost generation from renewables and nuclear leads to a collapse in prices to zero at times. This insight considers what is actually happening to prices and why the solutions being proposed seem not to consider the economics of price signals and efficiency incentives and so do not provide advantages for consumers and generators compared to the status quo. The solutions seem to offer a halfway house approach that is likely to have the opposite effects to what was intended. Read the full Insight here.
ECA has been contracted by the European Bank for Reconstruction and Development (EBRD) to scope, recommend and help implement appropriate performance-based incentives (PBIs) for electricity network firms in North Macedonia. Work will cover “traditional” PBI areas such as interruptions but also focus on how decarbonisation objectives may be supported.
Finally! For the first time in 3 years, we were able to restart our tradition of the ‘ECA Summer week’. It’s a week whenl ECA colleagues from around the world get together in London for fun, games, the occasional tipple and interesting discussions. Last week we orienteered our way through the East Sussex countryside (thanks to Arena Events for an amazing day), had the pleasure of tasting British wines c/o Balfour Winery and celebrated ECA’s 25th anniversary at The Union Club. Thanks to all staff at ECA for a fantastic week.
Please see our LinkedIn page for more photos.
Peter Robinson recently acted as Webinar Moderator for a panel discussion on ‘Electrification Challenges in Sub-Saharan Africa’, the first in a series of webinars hosted by ERRA. This first webinar discussed the status quo and ways forward for the fundamental development of electricity access in Sub-Saharan regions. Speakers presented current statistics and elaborated on ongoing challenges and needs to foster the process, and the event also aimed to shed light on existing projects that enhance regional regulatory cooperation. The full recording of the panel discussion can be heard HERE and the next will take place in Autumn 2022.
We took the opportunity to have a complete office makeover whilst our staff had to work from home. Our refurbishment includes bright new meeting rooms, pristine desk spaces, a large break-out space, shiny new kitchen, and an energy efficient heat pump system. A sleek and refreshed look for the London office and a big thumbs up from all of the team here at ECA.
This month we are pleased to welcome Ben Gregory to ECA. He graduated in BA(Hons) Politics, Philosophy and Economics from the University of Oxford in 2020, then went on to complete a master’s degree in MSc Environmental Economics and Climate Change at the London School of Economics. Prior to starting at ECA, Ben spent 6 months working for Greenback Recycling Technologies, where he supported the planning and development of their carbon accounting system. He will contribute to the team with data analysis; a big welcome to the ECA team Ben!
ECA will be responsible for verifying triggers for loan disbursements have been met as an independent auditor, after being appointed by the Asian Development Bank, as part of a team led by SMEC, to be the independent verification agent on financial matters for a policy-based loan to PLN, the Indonesian state electricity utility.
We are pleased to announce ECA has been contracted by Malaysia’s Energy Commission, Suruhanjaya Tenaga, to assist and facilitate the second gas regulatory period (2023-2025) and assess the first gas regulatory period (2020-2022) which determine the allowed tariff for the utilisation of gas facilities across gas transmission, gas distribution and regasification plants. This comes after successfully assisting Malaysia’s Energy Commission, Suruhanjaya Tenaga, to develop the guidelines required for the determination of gas facilities tariff under an Incentive-Based Regulation (IBR) Framework, and assisting in facilitating the first gas regulatory period.
Targeting European Union (EU) accession in 2026, Montenegro must prepare for operating under the EU Emissions Trading Scheme (ETS) and the Carbon Boarder Adjustment Mechanism (CBAM). Unique county characteristics, including a very small number of major point source emitters, lend specific challenges with creating a functioning ETS in the country. ECA have been contracted by the World Bank under the Partnership for Market Implementation (PMI) initiative to create a “readiness support plan” (RSP) outlining where support is required for Montenegro to successfully implement carbon pricing that both delivers real emissions reductions and facilitates EU accession. Preparation of the RSP culminated in a workshop meeting with key entities to discuss and finalise priority areas for PMI support.