'Revenues they never dreamt of' | EU Commission chief eyes crisis raid on renewables profits

Ursula von der Leyen also lines up windfall swoop on oil & gas companies and proposes liquidity support for utilities and price cap on Russian gas

European Commission president Ursula von der Leyen has proposed a cap on revenues of companies generating power at low cost such as renewables or nuclear to subsidise low-income households and vulnerable companies hit by sky-high electricity prices in the wake of Russian energy curtailment.

The controversial measure will be discussed at a meeting of EU energy ministers Friday, and is similar to a proposal made earlier this week by the German government which was strongly criticised by the green energy sector.

“The low-carbon energy sources are making in these times – because they have low costs but they have high prices on the market – enormous revenues,” von der Leyen said in a statement.

“Revenues they never calculated, revenues they never dreamt of and revenues they cannot reinvest to that extent. These revenues do not reflect their production costs.

“So, it is now time for the consumers to benefit from the low costs of low-carbon energy sources like, for example, renewables. We will propose to re-channel these unexpected profits to the member states so that the member states can support vulnerable households and vulnerable companies.”

‘Solidarity contribution’ from oil & gas

The EU commission president also said the same should be valid for “unexpected profits of fossil fuel companies”, which should pay a solidarity contribution.

Some countries such as Italy and Greece in the wake of the current energy crisis already have started to demand a tax on excessive profits from utilities, but the measures were followed by an avalanche of law suits.

Von der Leyen stressed that the EU already has adopted measures to ease its dependence on Russian energy, such as a filling of underground gas storage systems that already have surpassed an 80%-threshold ahead of an end-October deadline.

“But we also see that the Russian manipulation of the gas market has spill-over effects on the electricity market,” she said, adding that a drought in much of Europe has also reduced hydro-power in the EU, while there is also less nuclear power available (due to massive maintenance in France).

“And this is the reason why we are now confronted with astronomic electricity prices for households and companies, and with an enormous market volatility.”

The commission is also proposing mandatory energy saving measures during peak demand hours, and liquidity support for energy utilities struggling with the volatility of markets.

A final proposal is a price cap on Russian gas to impede the country from earning billions despite EU sanctions.

“We all know that our sanctions are deeply grinding into the Russian economy, with a heavy negative impact,” von der Leyen said.

“But Putin is partially buffering through fossil fuel revenues. So here, the objective is: We must cut Russia's revenues, which Putin uses to finance his atrocious war in Ukraine.”

The Russian president according to media reports in reaction to the EU Commission’s proposal has already threatened to halt gas flows to Europe completely.