The European electricity market: mechanisms, players, risks
Analysis: Under the merit-order principle, the most expensive plant still needed sets the power price.
Under the merit-order principle, the most expensive plant still needed sets the power price.
Several forces are at work in “The European electricity market”: the interest rate environment, domestic and foreign demand, regulation and, not least, market participants' expectations. None of these can be viewed in isolation.
Risks include unexpected political decisions, supply chain disruptions and abrupt shifts in financial market sentiment. Opportunities arise where companies respond early to changing conditions.
Anyone looking into “The European electricity market” quickly encounters a wealth of figures and opinions. For a sober assessment it pays to go to primary sources: official statistics, publications from the responsible authorities and companies' own reports.
The key is to separate short-term swings from structural developments. Individual monthly readings can be distorted by one-off effects; trends over several quarters are more telling.