Why cheap energy is not self-evident

The expectation that energy prices will automatically decline through market mechanisms alone overlooks several fundamental realities. The situation recalls the promises made in the 2000s that electricity market liberalization would deliver cheaper power, expectations that were ultimately contradicted by subsequent developments.

The Limits of Price Elasticity in Energy Markets

Energy remains an essential commodity, and demand for it is largely inelastic. Households, businesses, and critical infrastructure cannot significantly reduce their consumption when prices rise. Despite improvements in energy efficiency and the growing penetration of renewable energy sources, the capacity for price adjustment remains limited. As a result, energy crises frequently evolve into broader social and economic crises, while the belief that renewables and energy storage alone will solve the problem often represents an oversimplification.

Storage Is Necessary, but Not Sufficient

Electricity storage technologies are necessary, but they remain complementary solutions. They do not generate new energy; rather, they shift its availability over time. This means that reliable baseload and backup generation capacity is still required, particularly during periods of low wind and solar output. In this context, natural gas continues to serve as a key balancing mechanism for electricity systems. Maintaining reserve capacity comes at a cost, which is inevitably incorporated into the final price of electricity. Markets do not pay only for energy produced at a given moment; they also pay for security of supply.

Cross-Border Trade and Systemic Market Distortions

At the same time, distortions in cross-border electricity trade are by no means unique to Greece. The phenomenon of exporting electricity at low prices during periods of oversupply and importing it at higher prices during peak demand occurs across regions ranging from Northern Europe to the United States. This is a structural feature of the energy transition that highlights the strategic importance of robust grids and interconnections.

Why Grids Are Becoming the New Strategic Priority

It is therefore no coincidence that the European Union is now prioritizing the modernization of electricity networks and interconnectors rather than focusing primarily on the development of new LNG infrastructure. The objective is not merely to ensure the availability of energy, but also to ensure that it can be delivered where it is needed, when it is needed, and at an affordable cost. At the same time, final energy prices are influenced not only by fuel costs but also by taxation and regulated network charges. Consequently, declines in international energy prices do not always translate proportionally into lower consumer bills.

Consumer Energy Costs versus Geopolitical Infrastructure

For Greece, with annual natural gas requirements of approximately 6 billion cubic meters, the conclusion is clear. A balanced strategy is needed, combining grid modernization, diversification of supply sources, responsible assessment of domestic resources, and strengthened energy security. At the same time, a clear distinction must be made between reducing energy costs for consumers and the geopolitical value created by additional LNG infrastructure, pipelines, and transit projects. While such investments can enhance the country's regional strategic role, they do not automatically result in lower energy prices. On the contrary, part of their cost is often passed on to the broader economy and ultimately affects citizens' living standards, as consumers are called upon to finance infrastructure that may have significant strategic value but does not necessarily deliver immediate benefits on their energy bills.

The Real Challenge of the Energy Transition

The central lesson is that energy policy cannot be built on simplistic promises. It requires realism, long-term planning, and a careful balance between three objectives: affordable prices, security of supply, and national strategic strength. This is the true challenge of the energy transition.

Political / Article, Wednesday, September 23, 2026

https://www.political.gr/political-23-09-26/