Impact assessment of emergency market intervention measures to tackle high energy prices
The Council of the EU introduced emergency intervention measures to address high energy prices in October 2022. The report “Impact assessment of emergency market intervention measures to tackle high energy prices – with a focus on the Nordic wholesale market” describes the implementation of these measures in Denmark, Finland, and Sweden. Simultaneously, readers are provided with a theoretical macroeconomic analysis of the implications of the interventions.
During the winter of 2022–2023, electricity consumption in the Nordic countries witnessed a reduction, both during peak hours and in total. However, the report highlights that the decrease in energy consumption cannot be solely attributed to the emergency measures. Other factors, such as high prices, a mild winter, and heightened awareness of the power market situation, likely played significant roles in influencing the reduced demand.
Furthermore, it is emphasized that the measures targeting electricity producers – do not distort short-term production incentives, though they may distort long-term incentives to invest. To avoid negative impacts on investments, it is recommended that the emergency measures are temporary, one-time measures that were introduced as a response to an extraordinary crisis.