Europe is facing energy crisis in winter because of Ukraine

The winter will be challenging for the energy sector as prices on power exchanges are going up due to the events in Ukraine, Prime Minister of North Macedonia Hristijan Mickoski said.

About half of Ukraine’s power generation capacity isn’t in operation, according to the International Energy Agency (IEA), so the country has turned from a net exporter of electricity to an importer.

The prime minister’s warning mirrors earlier requests and appeals of Balkan countries – Greece, Bulgaria, Romania, and North Macedonia, regarding a large increase in electricity prices. They argued that a regional electricity crisis has already grasped Southeastern Europe.

The four countries also highlighted the huge price disparity in electricity prices on power exchanges in the region against the rest of the continent. Winter could exacerbate the situation.

State news agency MIA quoted Hristijan Mickoski as saying that he anticipates quite a challenging winter, not because of the temperatures, but because of the situation in Ukraine. Its power system has been destroyed, so the country imports electricity from Europe, he noted.

Mickoski: Ukraine’s power system has been destroyed

It could elevate prices on European power exchanges and reduce available quantities, so North Macedonia must be ready, Mickoski said.

He noted that the operations of state-owned power utility Elektrani na Severna Makedonija (ESM) have been stabilized even though the new management inherited a debt of MKD 5 billion (EUR 81 million). Mickoski became prime minister in June after his VMRO-DPMNE party won the election, marking a change in the ruling coalition.

Sanja Božinovska became Minister of Energy, Mining and Mineral Resources, and ESM got new management, which soon acknowledged it required unplanned electricity imports.

High electricity prices in SEE will be discussed on October 15 in Brussels

Issues with electricity prices in Southeast Europe began in summer when record-high temperatures boosted electricity consumption. Prices doubled, back to levels from the energy crisis.

However, experts didn’t point to heat as the main reason, but rather the reduction of cross-border transmission capacities, exports to Ukraine, and flow-based market coupling (FBMC). It is a mechanism for allocating electricity in cross-border exchange across much of Europe.

Mitsotakis: The prices have been doubled

Bulgaria, Greece, and Romania asked the European Commission to act to prevent high prices, and the EU executive arm scheduled talks on the issue for October 15.

In his letter last month to the European Commission, Greek Prime Minister Kyriakos Mitsotakis noted that wholesale electricity prices in Greece more than doubled from EUR 60 per MWh in April to EUR 130 per MWh in August. “This is a regional crisis,” he claimed.

North Macedonia asked the Energy Community for help

Mitsotakis said there is a disconnect between an energy transition that is highly successful and electricity prices. Relative to last summer, the country’s electricity production from wind and solar increased by 25%, while output from lignite fell 27%, he added.

Since it is not a member of the EU like the other three countries of the region, North Macedonia urged Energy Community Secretariat Director Artur Lorkowski to initiate the examination of the reasons for the huge price disparity.

Of note, until the war with Russia, Ukraine was a net exporter of electricity, and now it depends on imports. For example, last summer the region of SEE exported an average 800 MW to Ukraine and Moldova, and in the summer of 2021, it imported 700 MW from Ukraine.