The agenda of the EU Energy Council meeting held on Monday in Brussels included issues such as high prices and security of supply. During the meeting, the director of the EU Agency for the Cooperation of Energy Regulators (ACER) presented key insights into the EU energy markets, highlighting major challenges and making recommendations to address these challenges.

According to ACER, early 2024 recorded the lowest prices for energy and gas since 2021 due to strong renewable supply and nuclear recovery in France. Electricity prices across the EU averaged €81/MWh last year, compared to €227/MWh in 2022.

However, average prices for energy are still two times more expensive than in the US. (€46/MWh) while gas prices are five times as high (€27/MWh). The report also shows “noticeable regional differences” in energy prices, as well as high volatility “driven by gas price fluctuations and renewables’ variability.” 

According to the report, gas consumption continued to decline, with the EU consuming 24 TWh less gas than in 2023 resulting in a share of  just 14%. Coal generation also fell for the second straight year resulting in fossil fuels contributing to just 33% of EU power generation. However, despite reduced reliance on gas generation, gas continues to be the main driver for power prices. 

“But even though the share of electricity produced with gas fell to 14%, from 18% in 2020, natural gas prices still determine electricity prices 40% of the time,” warns EURACTIV in an article published this morning. The same worries were raised by ACER. “While electricity markets are becoming less reliant on gas generation overall, they are increasingly exposed to gas market fluctuations during periods when fossil-fired generation is required.”

According to ACER, over the next two years, with potential developments starting as soon as late 2025, gas and energy prices are expected to see a significant decline amid higher LNG imports, continued growth in renewable energy and efficiency measures.