Facing the electricity crisis in Europe | Is it time for emergency intervention or a full revamp?

The Russian invasion of Ukraine has caused sharp electricity price increases. Triggered by unprecedented natural gas price inflation, this development has severely affected utilities, industrial and private consumers, prompting policymakers to discuss changing the rules of European electricity markets. In a new study, Deloitte experts explore causes and effects, as well as the range of policy options. Prominent approaches include short-term measures such as demand reduction and excess profits redistribution. But the long-term view should not be neglected, as interventions increase the risk of creating market inefficiencies. To support the market’s long-term viability, additional investments in power grids and renewable energy sources are some of the most pressing strategic priorities. 

In this new Deloitte study “Facing the electricity crisis in Europe” potential options for utilities and consumers are discussed in more detail, for instance the increased installation of power storage facilities (pumped hydro), or regulated incentives for Power purchase agreements, e.g., structured as
Contracts-for-Difference (CfD), which help to establish a future price
corridor. For more insights into the European electricity crisis, download the comprehensive Deloitte study here.