Electricity Markets in a State of Crisis: An Overview of the Suggested Policy Measures

Olli-Pekka Kuusela and Jussi Lintunen

No 113, ETLA Brief from The Research Institute of the Finnish Economy

Abstract: Abstract If the worst-case scenarios materialize during the upcoming winter months, electricity markets are in danger of plunging into a severe and crippling crisis. The situation unfolds against the backdrop economic sanctions imposed by the EU on Russian economy in the aftermath of the war in Ukraine and Russia’s retaliation in curtailing energy exports to the member countries. In Finland, some electricity users are bearing a greater burden of the ensuing market turbulence. Therefore, political consensus has emerged in support of providing some economic relief for those households facing rapidly increasing costs of living. However, as a general principle, consumers and firms should primarily rely on private means for preparing and withstanding temporary market fluctuations. Instead of broad, untargeted support measures, the policy action should mainly focus on providing temporary relief for those low-income groups who cannot cope with the increasing cost of electricity, while also taking measures to reduce pressure on excessive prices. Additionally, the government should focus its efforts in boosting domestic electricity production, with the goal of reducing the risk of rolling blackouts during the coldest days of the winter months. All households should also have an incentive, or at least a sense of national urgency, to adjust and save in electricity consumption.

Keywords: Electricity markets; Taxation; Subsidies; Electricity shortage; Emissions trading; Investment (search for similar items in EconPapers)
JEL-codes: H20 Q40 Q41 Q48 (search for similar items in EconPapers)
Pages: 12 pages
Date: 2022-09-01
New Economics Papers: this item is included in nep-cis and nep-ene
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.etla.fi/wp-content/uploads/ETLA-Muistio-Brief-113.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rif:briefs:113

Ordering information: This working paper can be ordered from
https://www.etla.fi/ ... ikkatoimenpiteisiin/

Access Statistics for this paper

More papers in ETLA Brief from The Research Institute of the Finnish Economy Contact information at EDIRC.
Bibliographic data for series maintained by Kaija Hyvönen-Rajecki ().