Seven international and two domestic causes for the rise in the price of Energy, locates the Energy Institute of South East Europe an analysis of the market evolution, which will be presented at a conference on the energy crisis which will take place the day after Wednesday.
According to IENE, the crisis and unprecedented prices will continue at least until the winter of 2023, while in the event of a war in Ukraine and a disruption of Russian gas supplies (a scenario that is considered unlikely), Europe must use all its options: «from old coal plants and nuclear power plants to dormant gas fields, such as in Groningen in the Netherlands».
Currently, Russia's Gazprom has in recent months halved its gas deliveries to Europe and Europe is filling this gap, seeking Liquefied Natural Gas (LNG) cargoes. LNG cargo deliveries in Europe have doubled compared to last year, with most of it coming from the US.
The international factors that caused the price rise, according to IENE, are:
1.Η high demand for natural gas after the economy opens up from the lifting of the lockdowns.
2.Ta low stocks in gas storage in Europe last fall.
3.The last winter's cold front which led to even higher levels of demand.
4.The geopolitical poker played by Russia, which is one of Europe's largest suppliers of natural gas. Critics of the Kremlin accuse Russia of deliberately leaving Europe without sufficient gas supplies because of political tensions with Ukraine. They also speak of pressure to speed up the certification for the operation of the gas pipeline Nord Stream 2 which remains inactive for commercial reasons because the new government in Berlin does not give the green light.
5.The nuclear reactors in France, which supply much of Europe's electricity generation, had to be closed for emergency maintenance.
6.Because of the winter season, photovoltaic and wind farms are not as efficient.
7.The prices of royalties carbon dioxide emissions exceeded the very high level of 85 Euro/tCO2.
The endogenous causes can be summarised as follows:
- In Greece there is a power shortage and limited interconnections, with the result that all energy passes through the Exchange and consumers are exposed to high prices.. In contrast, in the Nordic countries, overcapacity and numerous interconnections have increased competition between generators and suppliers, with the result that the market price has an impact of only 20% on electricity prices for businesses and households.
2.Electricity suppliers in Greece pass on, through the indexation clause, not only the increased cost of the wholesale price but also the surcharges that shape the final cost of the energy they purchase for their customers.. These increases are not negligible.
In November, for example, consumers paid costs for system losses (High Voltage) Euro7.97/MWh, for system reserve Euro2.08/MWh and for the balancing purchase Euro5.50/MWh. «The cost of network losses, commonly known as electricity theft, which follows the fluctuation of the retail price, is unimaginable for a European country. and in November it was Euro 35/MWh, from Euro 10-12/MWh before the crisis, just Euro 4 lower than the state subsidy», IENE stresses.
At the wholesale level, increases in gas prices exceeded 850% in 2021, significantly affecting electricity costs, where wholesale price increases exceeded 300%.
At retail, the monthly extra cost for a household with a consumption of 600 kWh only for electricity and not for the whole bill, is estimated for November compared to the corresponding month of 2020, around Euro80 after deducting the state subsidy of Euro39. Without the subsidy, that is, the consumer would pay Euro119. In December, with the jump in the wholesale price from Euro229/MWh in November to Euro235/MWh, the extra cost for the same electricity consumption reaches Euro100 after the subsidy.
