​Resilience to Price Shocks in Coupled Gas-Electricity Markets 

This CERRE paper analyses the interlinkages between European gas and electricity markets and examines how price shocks propagate across the two systems.

Kong Chyong argues that high-impact, low-probability events, including periods of LNG supply stress, can generate severe price volatility, particularly under compound gas-power conditions, and that growing global gas-market integration allows external shocks to transmit rapidly into Europe’s wholesale electricity prices.

The paper suggests that many 2021–23 crisis measures functioned mainly as ex-post coping mechanisms, whereas stronger resilience depends on ex-ante measures that reduce exposure and dampen amplification, including demand-side flexibility, diversification, storage governance, and procurement and long-term contract design.

To support policy-makers in strengthening energy system resilience, the paper proposes an Energy Price Resilience (EPR) metric. Building on the existing gas n-1 security standard and electricity adequacy assessments, the EPR would better capture spillover effects between gas and electricity markets under market stress, including exposure to global LNG supply volatility.

This CERRE paper is a contribution to the renewed debate on electricity market design. It concludes that most research finds the current framework to have proven resilient during the 2021–23 energy crisis and to remain the most efficient mechanism for dispatch and investment.