Price caps a risky solution, expert warns, proposing filters for bids

A leading energy market expert, professor Alex Papalexopoulos, has reiterated his opposition to a complete reform of the European electricity market, believing proposals currently being tabled will lead to perilous conditions.

Speaking at the 17th IAEE European Energy Conference, Dr. Papalexopoulos, the architect behind Greece’s target model, noted markets are signaling the need for reduced dependence on natural gas, representing too great a share of the energy mix.

The European electricity market needs reforms, but not in the manner currently being discussed in Brussels, Dr. Papalexopoulos contended. Instead, revisions should focus on issues such as flexibility and back-up solutions, the expert noted.

Dr. Papalexopoulos pointed out that US wholesale markets are equipped with special filters that examine offers submitted by gas units and determine whether these have the potential to manipulate the market. Equivalent filters do not exist in Europe, resulting in excessively high prices, he noted.

Dr. Papalexopoulos expressed doubts about price caps and recovery of windfall profits, noting they actually do not exist.