Surging energy and fuel costs push inflation to near-decade high
We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info
With the continent struggling to maintain its energy needs through a combination of the surge in demand as a cold winter takes over, along with an increase in supply as economies emerge from pandemic lockdowns, the EU is facing tough times. Already, tension is high between the EU and Russia over the ongoing crisis in Ukraine, but with Russia a major energy supplier to the continent, the notion that the predicament is becoming politicised is becoming more apparent than ever.
A recent map released by Energy Live shows some worrying figures for the majority of European nations.
The day-ahead energy price for the majority of Europe is on the top end of the scale in euro-per-megawatts.
France, Germany, Italy, Belgium and the Netherlands are all in the top echelons, along with numerous other nations.
For Germany, the price of 344.3 euro (£293.50) is a record high.
Speaking on Twitter, Bloomberg’s energy correspondent Javier Blas said: “A map is worth a thousand words (and in case a few words are needed: that day-ahead electricity price is a record for Germany and much of the rest of Europe).”
However, the United Kingdom has also been adversely affected.
Adding the UK’s situation to his Twitter feed, Mr Blas said: “Plus UK day-ahead power prices have surged to £411 per MWh, the 2nd highest ever level.”
Speaking of worse to come, he ended: “The tide of the electricity crisis continues to rise, and it will keep rising into the winter. (using the meteorological calendar, we’re just 15 days into winter, with another 75 days to go).”
The cheapest prices were found in Spain, Portugal, Romania and Bulgaria.
Just ten days ago, prices were less than 300 euros per megawatt.
Germany was at 265.3 euro per megawatt-hour, France 282 and Italy 269.
The increase will mean higher prices for end consumers.
The price of natural gas is being blamed as a major contributing factor to the problem.
Prices of natural gas are skyrocketing: at the Dutch Title Transfer Facility, Europe’s leading benchmark, prices have risen from £13.63 (€16) megawatt per hour in early January to £75 (€88) by late October, a hike of more than 450 percent in less than one year.
This, in turn, has sent electricity prices skyrocketing.
School closures: Fears pupils will NOT return in January [REPORT]
Macron humiliated as France ‘sliding backwards [REVEAL]
EU poised for Schengen travel overhaul [INSIGHT]
Although the European Union is gradually cutting down on its long-time dependency on fossil fuels – renewables became the bloc’s main source of electricity for the first time in 2020 – the shift has not been fast and widespread enough to contain the fallout from the crunch.
Together, natural gas and coal still supply more than 35 percent of the EU’s total production, with gas representing over a fifth.
The energy mix is vastly different across the bloc: fossil fuels have a marginal share in Sweden, France and Luxembourg, but take up more than 60 percent of total production in the Netherlands, Poland, Malta and Cyprus.
As coal, the most polluting fuel, is progressively phased out, many countries resort to natural gas as a transitional resource to act as a bridge before green alternatives, like wind turbines and solar panels, are rolled out.
Gas is also used for residential heating and cooking, making the price surge even more noticeable in the final expenses of consumers.
The EU’s exposure to volatile energy prices is poised to remain a risk in the coming years before the green shift brings the anticipated stability to the market.
In the meantime, governments will have to come up with interim solutions, such as lowering the tax rates and extra levies applied to energy bills, which in some countries can make up half of the final price.
Governments can also offer direct injections of cash, like France’s “chèque énergie”, to offer immediate relief for those struggling to pay the bills, although such an instrument could quickly run over budget if the prices continue to swell, as they are forecast to do.
Explaining that the problem is here for the long-term, Dennis Hesseling, head of infrastructure, retail and gas at the Agency for the Cooperation of Energy Regulators told Euronews: “If we look at the forward prices, the prices that the traders are paying for delivery in the next month for gas, it is expected to remain high for the next half-year or so.”
Source: Read Full Article