Published on Sunday 18 September 2022 | Article n°416
Warning The following is a list of articles published by various media outlets because, on the one hand, none of them seemed to us to be exhaustive and, on the other, the understanding of the "inframarginal" mechanism seemed to us to be unclear. We have avoided going into too much detail in these articles, as the authors also seemed to have little understanding of the mechanism.
The European Commission (EC) has proposed temporarily capping the income of "inframarginal" electricity producers.
This is electricity produced using low-cost technologies such as renewables, nuclear and lignite, which supply electricity to the grid at a lower cost than the price set by more expensive marginal producers.and lignite, which supply electricity to the grid at a lower cost than the price level set by more expensive marginal producers.
Exceptional revenues from low-cost producers
According to the EC, these inframarginal producers "have made exceptional revenues", because gas-fired power stations have pushed up the wholesale price of electricity.
The Commission has proposed setting the cap on inframarginal revenues at €0.180/kWh until 31 March 2023, which it believes will allow generators to cover their investment and operating costs without hindering investment in new capacity.
Theoretical revenue of 117 billion euros
Member States could collect up to 117 billion euros a year thanks to this cap.
The cap should be limited to market revenues rather than encompassing total production revenues (including, for example, those from support schemes), to avoid having a significant impact on a project's expected initial profitability.
Member States have the option of introducing additional ceilings without Commission approval, and of excluding production facilities with a capacity of less than 20 kW from the revenue ceiling.
A solidarity levy on oil, gas and coal producers and refiners
The Commission is proposing a "temporary solidarity levy" on excess profits generated by activities in the oil, gas, coal and refining sectors that are not covered by the inframarginal revenue cap. This could bring in €25 billion.
The EC has proposed that Member States should aim to reduce overall electricity demand by at least 10% by 31 March 2023.
PV Tech of 14 September 2022