The European electricity market: the key questions answered
Explainer: 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.
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.
For executives, the main question regarding “The European electricity market” is their own exposure: which costs, revenues and financing conditions depend on it, directly or indirectly?
A proven approach is to run scenarios and monitor leading indicators regularly. That puts decisions on a solid footing without reacting to every headline.