In Europe, citizens and businesses are facing a rising tide in electricity prices. This is due to several factors, the combination of which causes an explosion of demand while reducing the levels of production and supply of electricity. More specifically:
1. The demand for electricity is increasing dramatically
This is since due to the increased percentages of the vaccinated population, the Covid-19 pandemic is being overcome, because of which the economies are entering a phase of growth trajectory.
2. The implementation of transition policies from electricity generation based on mineral raw material to green-clean electricity generation.
3. The drastic increase in the price of natural gas to high perennial levels.
a) Very low gas storage reserves.
b) Gazprom’s reluctance to increase the supply of the European market through Ukraine.
c) Competition with Asian countries (mainly India, China) that absorb LNG cargo.
Today, wholesale electricity prices in European markets are in the range of €80 – €90MWhr, where they are a record price for the last 13 years, leading to a reversal for both households and businesses.
In Germany, the issue of electricity prices will be a major point of contention in the run-up to the September elections. Next winter, European electricity consumers will be “shocked” by creating social unrest even though most of them support climate change policies.
As demand for electricity has increased, to reduce costs by reducing it, EU member states such as Germany, Belgium, the Netherlands, and Italy to increase electricity production levels are increasing their electricity production from coal.
Given Europe’s efforts to de-energize Russia from Russian hydrocarbons and on the other hand Russia’s efforts to highlight the need for the Nord Stream 2 pipeline, Gazprom continues not to increase the volume of gas to Europe via Ukraine. At the same time, Europe ‘s gas needs are rising as a severe winter has set in, with significant reductions in gas reserves.
Russian gas flows are still a key uncertainty for the European gas market for Q32021, while its price has already risen to €36MWhr.
The dangers lurk are a heat wave combined with a drought that would skyrocket electricity demand by reducing water resource levels that help cool nuclear reactors, which in turn could increase production. electricity.
The only solution is to return to the opening of nuclear power plants in Europe that could produce plenty of nuclear power which would then reduce the price of gas production next Q32021.
