Energy Crisis

European energy prices soar as winter gas supply pessimism mounts

European energy prices soar winter gas supply

Photo: Walter Sturn on Unsplash


July 7, 2022






July 7, 2022





Concerns for the energy security of Europe’s economy have become chronic – German Uniper and France’s EDF are on the verge of bankruptcy and the results of the EU’s gas diplomacy can’t keep up with demand. Benchmark prices show the market isn’t expecting any significant letdown in the next two years.

The European Union and its biggest economies are hectically working on contingency plans for the possibility of further cuts in Russian gas supply, but the recent developments are indicating there just may not be enough of the fossil fuel for the winter. European Commission President Ursula von der Leyen warned the 27-member bloc must prepare for a “complete cutoff.”

All the initiatives for offshore drilling for oil and gas, purchases of LNG and storage capacities and ramping up coal mining and thermal power plants are far behind the curve when current demand is concerned. Nothing can come quickly in the energy sector.

Power prices in France top EUR 1,000 per MWh

The latest leg up in the prices of electricity and gas kicked in with the announcement of a strike in the Norwegian gas sector, which provides 13% of EU’s gas. The government in Oslo intervened to stop the walkout, but supply issues are still piling up across the continent.

Forward power contracts for France for the fourth quarter soared to a record above EUR 1,000 per MWh at one point yesterday as the government revealed it intends to fully nationalize flagship electricity producer EDF. The company has been struggling with delays and lack of funding for investments and upgrades in the facilities in its home country and Britain.

Half of EDF’s nuclear reactors are still offline due to corrosion in the piping systems

One of the worst factors in the European energy crisis is the corrosion that earlier prompted the halt in operations of half of EDF’s nuclear reactors in France. The government controls 84% of the utility’s shares.

The giant Nord Stream 1 pipeline, which runs from Russia to Germany under the Baltic Sea, is scheduled to be shut for maintenance from July 11 to 21. Uniper, Germany’s biggest importer of Russian gas should be nationalized, according to unionists, while the government in Berlin promised not to let the surge in energy costs spill over to consumers. The utility has acknowledged it is in bailout talks with the representatives of the cabinet of Chancellor Olaf Scholz.

And it is just the start, as energy providers throughout Europe can’t keep up with the rise in market prices while having to supply consumers under long-term contracts with low tariffs. Industrial producers are likely the next ones to sink due to high dependence on fossil fuels and the plans for rolling outages in case of gas flow disturbance.

Gas futures testing new record on risk of gas supply halt

The German baseload power contract for delivery next year, a benchmark for Europe, surpassed EUR 355 per MWh for the first time. Dutch TTF gas futures, also the main reference for the continent, are testing a new record as they reached EUR 186 per MWh today.

Market prices show investors aren’t expecting a return to any kind of a sustainable balance between energy supply and demand for at least two years.

The EU is facing lawsuits from Austria, Luxembourg and a group of NGOs for endorsing investments in gas and nuclear energy as a transitory solution in the switch to clean sources

Of note, the European Parliament accepted the introduction of gas and nuclear power in the EU’s green taxonomy as transitional solutions in the transformation of the energy system to clean sources. But Austria and Luxembourg are threatening to sue the European Commission, and so does a group of environmentalist organizations.

Furthermore, Austria told Gazprom it would allocate its share of the Haidach gas storage facility to other users, citing the Russian company’s failure to utilize the tank as much as it is obligated to.

As for spot power prices, they surged 24% to EUR 520 per MWh in Croatia today. Next in the top of the chart for Europe is Slovakia, with a 22% jump to over EUR 510 per MWh. Western Europe showed a sharp contrast, as buyers paid just EUR 155 per MWh in Germany and EUR 158 in the Netherlands.

Comments (0)

Be the first one to comment on this article.

Enter Your Comment
Please wait... Please fill in the required fields. There seems to be an error, please refresh the page and try again. Your comment has been sent.

Related Articles

Azerbaijan on good track to double gas exports to EU, start supply of green energy

Azerbaijan on track to double gas exports to EU, start green energy supply

06 February 2023 - The 9th ministerial meeting of the Southern Gas Corridor Advisory Council in Baku brought together representatives from 16 states and the EU

Mostar to become first city in BiH with solar power plant for self-consumption

Mostar to become first city in BiH with solar power plant for self-consumption

06 February 2023 - A few weeks ago, The Sarajevo Canton announced a similar initiative - to establisha a public company for renewables

Greece subsidize rooftop photovoltaics only if batteries included

Greece to subsidize rooftop photovoltaics only if batteries are included

06 February 2023 - Greece will launch a public call next month for subsidies for rooftop photovoltaics that would be paired with batteries

Europe s largest solar power Portugal Iberdrola Fernando Pessoa

Europe’s largest solar power project is underway in Portugal

06 February 2023 - "I greeted the sun by raising my right hand." Europe's largest solar power plant will be named after Portuguese poet Fernando Pessoa.