Demand Aggregation and Joint Purchasing of Natural Gas in the European Union: Analysis of the AggregateEU Mechanism

Following the energy crisis in 2022, EU adopted the REPowerEU Plan proposing several actions to mitigate its consequences. One of the proposed actions was the introduction of demand aggregation and joint purchasing of natural gas, known under the name AggregateEU. This paper describes the AggregateEU mechanism and analyses its framework and implementation from the perspective of economic efficiency. It compares the mechanism with the economic model of buyers’ groups and monopsony, identifying potential benefits and costs of such a market structure. The paper shows that the original idea of joint purchasing was not fully implemented which reduces the overall efficiency of the AggregateEU mechanism. Keywords: Demand aggregation, Joint purchasing, AggregateEU, REPowerEU, Natural gas, Monopsony