Target model positions supported by energy-intensive industrial energy consumers in a public consultation procedure staged by LAGIE, the Electricity Market Operator, have brought to the fore a proposal calling for the abolishment of minimum-price limits on electricity purchases.
The abolishment of minimum-price limits on electricity purchases has raised concerns over the sustainability of independent electricity producers.
LAGIE’s proposal entails setting a minimum price limit on electricity purchase offers that is equal to the variable costs of each electricity producer.
Though all sides acknowledge that restrictions will eventually be lifted amid the new market model, certain players support that minimum purchase price limits are currently needed to protect market liquidity.
The operator and certain market players contend that the market is not yet mature enough for restriction-free offers, which, they believe, would threaten the sustainability of independent electricity producers.
According to sources, market authorities want to maintain minimum purchase price limits as their abolishment would reduce the System Marginal Price (SMP) by 10 euros per MWh, a study has indicated.
Such a development would be favorable for the main power utility PPC, which, as the market’s biggest supplier, purchases significant electricity amounts to cover its needs.
Consumers, especially major-scale consumers such as steel industries, would also benefit as their energy costs could be significantly reduced during low-demand hours, especially at night.
The target model is aiming to harmonize the electricity wholesale market with EU standards.