The unprecedented regulatory interventions in the market reduced investment appetite in renewables in the EU in 2022. With many stakeholders reporting the negative effects of the inframarginal revenue cap, the Commission took this feedback into account and advised against the extension of emergency measures in its report. This signals positive development for the market, alleviating pressure on the supply side; however, this alone may not be enough to remediate the undermined investors’ confidence in the European green market. Other markets, such as the US, seem more attractive; the US Inflation Reduction Act (IRA) channels billions of dollars in green solutions, with its European counterpart, the Net Zero Industry Act, paling in comparison.
Context The emergency measures were rolled out in October 2022 to address high energy prices. They encompassed energy demand reduction, revenue cap on renewables, and support for final consumers. The market revenue cap of a maximum of 180 EUR/MWh was int…
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