Electrical current: Joint letter from Greece to Romania to Bulgaria to the Commission on measures

Measures are being taken to address the sharp rise in prices on the wholesale markets in Southeast Europe, observed last summer, due to exogenous factors, the Energy Ministers of Greece, Romania and Bulgaria are asking the Commission. In particular, at the initiative of the Greek Minister of Environment and Energy, Theodoros Skylakakis, a letter was sent on Friday (27.9.2024) to the EU Energy Commissioner Kadri Simson, co-signed by Romania’s Minister of Energy, Sebastian – Ioan Burduja and Bulgarian Energy Minister Vladimir Malinov. As part of the letter, the three Ministers point out that price volatility in Southeast Europe has put considerable pressure on the economies of the countries, threatening both energy security and market stability throughout the region. Key issues affecting are included: Insufficient interconnection capacity: The lack of cross-border interconnections prevents efficient electricity flows in the Southeast European region in critical times, exacerbating price increases, especially during peak hours, when renewable energy production is reduced. The development of these interconnection links that are missing is vital for reducing congestion and convergence of cross-border prices. The fragmentation of energy markets: The limited integration of regional electricity markets with the EU’s wider system has led to significant price divergences, with inequalities often exceeding EUR 50-100/ MWh. In order to restore market cohesion and improve price stability, it is necessary to accelerate investment in infrastructure and to consolidate our markets more closely with the EU market. The reduced flexible production capacity: The availability of flexible sources of production, particularly hydroelectric energy, has been limited due to prolonged droughts, leading to greater dependence on coal and gas-fired plants. This situation highlights the urgent need for investments in flexible and clean production capacities. Geopolitics and security of supply: The reversal of traditional electricity flows due to Ukraine’s turning into a net importer from the Southeast European region is further pushing the system, raising prices. The letter stresses the need to take the following measures to address the situation: 1. Short-term measures: Direct measures should be considered, such as taxation of electricity producers and traders. The revenue generated by this tax could be redistributed to mitigate the burden on consumers and stabilise the market in the short term. Cooperation between national regulatory authorities on market monitoring should also be strengthened. 2. Long term measures: The European Commission should give priority to the development of basic interconnection infrastructure in Southeast Europe. In this light, the main requests of the three countries for the European Commission are summarised as follows in the joint letter: Priority in the development of interconnection networks in Southeast Europe to cover the infrastructure gap that isolates the region from the wider EU market. Strengthen the cross-border capacity of interconnections with a view to convergence of prices in the single market, particularly during peak demand periods. Application of short-term financial measures, such as taxation of producers’ ‘downturn’ profits for market stabilisation and consumer relief. Strengthen market and regional cooperation to promote price harmonisation and improve energy security throughout Southeast Europe. It is stressed that the letter to the EU Energy Commissioner is accompanied by a joint technical memorandum developed by the three countries, combined with a note from the respective Transmission System Operators, which describes the main factors that have led to price increases. The three countries’ belief is that coordinated action at EU level is necessary to address the challenges and ensure the resilience of the energy market in the region. Greece, Romania and Bulgaria commit to working closely with the European Commission to implement these critical measures and promote a safer, efficient and affordable energy future.