Scenario analysis of the potential revenue from the application of the cap on market revenues was carried out in Q1 2023 and estimated a range of between €80 and €150 million could be raised from the measure. It is important to note however that these estimates reflected the range of uncertainty in the energy markets at that time.
The model’s methodology was based on using estimated output data for generators in Ireland while applying a revenue cap to the respective generator based on their fuel source (wind, coal etc.). Results were then adjusted for hedging assumptions and optimism bias. The model was also subjected to external peer review from the IGEES Network.
The legal basis for the legislation, Council Regulation (EU) 2022/1854, only provides for a cap on market revenues from 1 Dec 2022 until 30 June 2023. The Council Regulation does not provide the basis to extend the cap after this period. Therefore, government decided not to extend the measure beyond June 2023. In addition, a recent review by the European Commission (attached) concluded that a prolongation of the market cap measures is neither indicated nor desirable.
European Commission review of Council Regulations
