The reasons why the Prime Minister sent a letter to the President of the EU Orsula von der Leyen on the distortions in the electricity market and the extreme fluctuations between Central and South-Eastern Europe, was explained yesterday by Nikos Tsafos, Kyriakos Mitsotakis’ adviser.

In a post, the Prime Minister’s close associate on energy issues demonstrated the dysfunctions recorded in the disputed geographical corridor from the beginning of the year until today. As he points out, from January to April, the region stretching from the Czech Republic and Austria to Bulgaria and Greece was largely interconnected and wholesale market prices were similar.

The picture started to reverse from May when the coupling weakened and we reached July when it had completely collapsed. On 11 July according to Mr. Chafo, the hourly price in Hungary was 940 €/MWh, while in neighbouring Austria it was 61 €/MWh, i.e. 15 times higher at the border.

During the summer, the disparities intensified as there were 395 hours where the difference between the most expensive and cheapest market in this region exceeded €100/MWh (it happened only 35 hours from January to May).

The reasons why the market ceased to be governed by the uniform rules of the Target model are attributed to the overall rise in prices, high temperatures, lower hydropower production, planned and unplanned electrical plant outages and additional demand created in Ukraine due to Russia’s attacks on the grid.

However, the Prime Minister’s advisor argues that the uneven nature of prices is a concern. He highlights the need for more coordination between member states to align decisions at country level, especially on outages, more EU-level legislation to oversee markets, more interconnections to ensure there is sufficient capacity to meet demand in more extreme scenarios, and better tools to manage the distortions that can be created when prices rise unevenly in a previously connected market.