European electricity prices and fossil fuel shocks since the 1970s

Line chart showing monthly oil and coal prices from 2003 to 2012 in nominal U.S. dollars. Four series are plotted: China Qinhuangdao 5500 kcal/kg coal (red), Australia 6667 kcal/kg coal (yellow with markers), NYMEX Central Appalachian coal futures (black dotted), and Dubai oil (black solid). All series generally rise together, with a sharp spike around 2008, a steep drop in 2009, partial recovery through 2011, and declines by 2012.

This report argues that European electricity prices have remained structurally tied to upstream fossil fuel shocks across five decades, regardless of whether markets were regulated or liberalised. Its central lesson is that price stability depends not only on more renewables, but on diversifying marginal flexibility away from fossil fuels. This report examines five major European electricity price shocks — 1973–74, […]

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