Mitigating Electricity Price Increases

WIFO Research Brief Presents Economic Policy Options
In a recent WIFO Research Brief the pricing mechanism for electricity via the merit order is analysed and policy options to dampen electricity prices are presented.

The global economic recovery after the COVID-19 crisis resulted in a significant rise in natural gas and oil prices in the second half of 2021. In Europe, this was compounded by a shortage of gas actively pursued by Russia, which led to exploding gas prices even before Russia's attack on Ukraine. The war in Ukraine, the economic sanctions imposed on Russia by the EU and Russia's counter-reactions are further contributing to the rise in energy prices. Thus, the challenges for the transformation of the European energy system have abruptly increased.

With their Research Brief, Michael Böheim, Gabriel Felbermayr, Claudia Kettner, Angela Köppl, Agnes Kügler and Stefan Schleicher want to provide orientation for economic policy makers.