The VERBUND-MorgenGespräch is a discussion event on the dialogue between the energy industry, politics and science on current topics in the world of energy.
VERBUND-MorgenGespräch: Not only demanding expansion, but also enabling it
07.12.2022Vienna
In today's MorgenGespräch, the VERBUND energy breakfast, CEO Michael Strugl and guests discussed the effectiveness of the tools implemented and available for intervening in the energy crisis. In a discussion led by Werner Sejka, he spoke to Lion Hirth, Professor for Energy Policy at the Hertie School in Berlin, Martin Selmayr, Head of the Representation of the European Commission in Austria, and Helene Schuberth, Head of the Economics Unit of the ÖGB (Austrian Trade Union Federation).
In today's MorgenGespräch, the VERBUND energy breakfast, CEO Michael Strugl and guests discussed the effectiveness of the tools implemented and available for intervening in the energy crisis. In a discussion led by Werner Sejka, he spoke to Lion Hirth, Professor for Energy Policy at the Hertie School in Berlin, Martin Selmayr, Head of the Representation of the European Commission in Austria, and Helene Schuberth, Head of the Economics Unit of the ÖGB (Austrian Trade Union Federation).
"From VERBUND's perspective, there are two key points that must determine our actions: secure supply and taking the strain off consumers", says CEO Michael Strugl, formulating the objective for the use of the instruments available in the EU's toolbox. At the same, he strikes a cautionary tone: "Almost every measure in one area, such as for price damping, simultaneously requires a measure in the area of supply security. The days of cheap energy being available around the clock in unlimited amounts are over for the long term," says Strugl of the long-range perspective in decision-making. It cannot be possible "to fight only symptoms but not causes in the long term." The expansion of renewable energy generation, storage capacities and electricity grids is therefore a matter of urgency – it must not only be required, but also enabled across Europe. "We need rapid procedures and a market design that also take this expansion and the provision of services for the security of supply into consideration.
For the coming challenges, VERBUND has prepared itself for the acceleration of the energy transition with "Mission V". The company is investing 1 billion euros per year in the energy transition – renewable generation, storage and electricity grids.
Keynote – Lion Hirth
In his keynote address, Lion Hirth dealt with the political responses, with a particular focus on Germany. He sketched a differentiated picture of the reactions to the "crazy" developments. At the same time, he contradicted forecasts that winter 2023/24 would be even tougher: "The markets do not show this." They forecast a relaxation, even though there would be no return to the historically low energy prices. The expert singled out some of the many policy measures that have been set in motion in Europe. He assesses measures to ensure the liquidity of participants in the energy market as sensible and stresses, "we need that." His analysis of the measures to subsidise energy prices is different: "All governments think they are helping their citizens. But that is one of the big mistakes of the energy crisis. We have actually driven up gas and electricity prices and thus made life more difficult for all consumers." Hirth makes the general observation that the effect of subsidising energy consumption is that price signals gain the upper hand over any reduction in consumption. This could lead to extremely critical situations, as demand and thus prices rise on the one hand, and an energy shortage is stoked rather than prevented on the other. In this regard, he also criticises the use of the term market failure: "Market failure is not what happens when there is a development that contracts political expectations." His solution to the current situation involves investments in renewables: "We must build our way out of this situation."
Helene Schuberth, ÖGB
That the electricity price was not decoupled from the gas price across the EU at the start of the energy crisis has been a capital error, according to Helene Schuberth. "We would have had a much lower inflation rate today and the fiscal costs of the crisis would also be lower." Ultimately, energy prices are systemically relevant prices that come at the beginning of a period of inflation. This alone would justify interventions in pricing. The fact that various price caps, such as, for example, the energy price cap for households called for by the ÖGB, had to be combined with savings incentives is self-explanatory, says Schuberth. A price cap also has to be intelligently designed, so as to avoid unintended consequences. Schuberth also added that the decarbonisation targets cannot be achieved with market instruments alone, nor with further price increases for fossil sources of energy; this recipe of the mainstream economy would lead to social upheaval. "The cascade of multiple crises we are currently living through demands fundamental market interventions in terms of strategic state planning.
Martin Selmayr, Representation of the European Commission
Martin Selmayr, head of the Representation of the European Commission in Austria, said: "Putin's brutal war of aggression in Ukraine shows that we in Europe cannot and no longer want to rely on cheap gas from a belligerent Russia. We must therefore drastically accelerate the energy transition now, more strongly promote renewable sources of energy, cushion energy price spikes for consumers and companies and all learn how to save energy again. Gas consumption in Europe fell by almost 25% in each of the months of October and November. At the same time, we doubled the energy output of wind, solar and hydropower in Europe this year. That is the right way to generate energy in Europe in the medium term, reliably and for affordable prices. We must now decisively continue along this path together
"From VERBUND's perspective, there are two key points that must determine our actions: secure supply and taking the strain off consumers", says CEO Michael Strugl, formulating the objective for the use of the instruments available in the EU's toolbox. At the same, he strikes a cautionary tone: "Almost every measure in one area, such as for price damping, simultaneously requires a measure in the area of supply security. The days of cheap energy being available around the clock in unlimited amounts are over for the long term," says Strugl of the long-range perspective in decision-making. It cannot be possible "to fight only symptoms but not causes in the long term." The expansion of renewable energy generation, storage capacities and electricity grids is therefore a matter of urgency – it must not only be required, but also enabled across Europe. "We need rapid procedures and a market design that also take this expansion and the provision of services for the security of supply into consideration.
For the coming challenges, VERBUND has prepared itself for the acceleration of the energy transition with "Mission V". The company is investing 1 billion euros per year in the energy transition – renewable generation, storage and electricity grids.
Keynote – Lion Hirth
In his keynote address, Lion Hirth dealt with the political responses, with a particular focus on Germany. He sketched a differentiated picture of the reactions to the "crazy" developments. At the same time, he contradicted forecasts that winter 2023/24 would be even tougher: "The markets do not show this." They forecast a relaxation, even though there would be no return to the historically low energy prices. The expert singled out some of the many policy measures that have been set in motion in Europe. He assesses measures to ensure the liquidity of participants in the energy market as sensible and stresses, "we need that." His analysis of the measures to subsidise energy prices is different: "All governments think they are helping their citizens. But that is one of the big mistakes of the energy crisis. We have actually driven up gas and electricity prices and thus made life more difficult for all consumers." Hirth makes the general observation that the effect of subsidising energy consumption is that price signals gain the upper hand over any reduction in consumption. This could lead to extremely critical situations, as demand and thus prices rise on the one hand, and an energy shortage is stoked rather than prevented on the other. In this regard, he also criticises the use of the term market failure: "Market failure is not what happens when there is a development that contracts political expectations." His solution to the current situation involves investments in renewables: "We must build our way out of this situation."
Helene Schuberth, ÖGB
That the electricity price was not decoupled from the gas price across the EU at the start of the energy crisis has been a capital error, according to Helene Schuberth. "We would have had a much lower inflation rate today and the fiscal costs of the crisis would also be lower." Ultimately, energy prices are systemically relevant prices that come at the beginning of a period of inflation. This alone would justify interventions in pricing. The fact that various price caps, such as, for example, the energy price cap for households called for by the ÖGB, had to be combined with savings incentives is self-explanatory, says Schuberth. A price cap also has to be intelligently designed, so as to avoid unintended consequences. Schuberth also added that the decarbonisation targets cannot be achieved with market instruments alone, nor with further price increases for fossil sources of energy; this recipe of the mainstream economy would lead to social upheaval. "The cascade of multiple crises we are currently living through demands fundamental market interventions in terms of strategic state planning.
Martin Selmayr, Representation of the European Commission
Martin Selmayr, head of the Representation of the European Commission in Austria, said: "Putin's brutal war of aggression in Ukraine shows that we in Europe cannot and no longer want to rely on cheap gas from a belligerent Russia. We must therefore drastically accelerate the energy transition now, more strongly promote renewable sources of energy, cushion energy price spikes for consumers and companies and all learn how to save energy again. Gas consumption in Europe fell by almost 25% in each of the months of October and November. At the same time, we doubled the energy output of wind, solar and hydropower in Europe this year. That is the right way to generate energy in Europe in the medium term, reliably and for affordable prices. We must now decisively continue along this path together
The VERBUND-MorgenGespräch
