President Markus Rauramo, CEO of Fortum, as well as Vice Presidents Catherine MacGregor, CEO of Engie, and Georgios Stassis, Chairman and CEO of PPC, have warned that reopening a market reform only recently concluded would risk delaying the massive investments needed to deliver affordable, secure and decarbonised electricity.
Mr Rauramo became the President of Eurelectric in June 2025 and is serving a two-year term to 2027. Eurelectric is the sector trade association representing the European electricity industry. It promotes decarbonisation, grid investments, and customer-driven electrification across Europe.
The debate over the marginal pricing system for the electricity wholesale market has reignited, with Commission President Ursula von der Leyen stating that she will bring “different options and findings on whether it is time to move forward with the market design” during the next European Council on 19-20 March.
Marginal pricing sets the price of a product or service equal to the marginal cost - the expense of producing one additional unit. In the European electricity market, it sets a single wholesale price based on the cost of the last, most expensive, power plant needed to meet demand. This ‘marginal plant’ determines the price for all energy generators. It is usually a gas-fired plant, which then incentivises cheaper renewables to enter the power market.
However, critics of this market design argue that it causes consumer energy bills to rise when gas prices soar. This in turn prompts discussions on measures such as Contracts for Difference (CfDs), which reduces market volatility and shields consumers from high energy prices. It operates by the government setting an agreed ‘strike price’, with the government making up the difference if the electricity price falls below the strike price.
The wholesale structure of the power market is used to determine uniform energy prices. This is important when prices vary across different European countries, depending on energy mix, regulation and interconnection. In Europe, this wholesale power market is based on marginal pricing (or pay-as-clear), meaning that every electricity generator receives the same price for power at particular moments in the trading activity. Prices are governed according to the production cost. Given that renewable energy is produced at zero cost, renewable energy is therefore always the cheapest energy to generate and is always bought first in the marginal pricing system. However, the overall price is determined by the last producer once the full demand has been met. This final generator is usually a gas-fired plant, meaning that even prices for renewable energy are determined by this gas plant.
Marginal pricing is believed to be the most efficient mechanism in order to ensure transparency and efficient investment incentives.
The letter sent by the Eurelectric Presidency also stresses that there are measures that the European Commission and Member States can adopt to reduce prices in the short term without distorting the market.
Additionally, the Eurelectric Presidency reaffirms the key role of the EU Emission Trading System (ETS) in Europe’s decarbonisation and calls for maintaining its integrity to further drive cost-efficient emission reduction.
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