Europe is preparing for energy shortages in the midst of the first winter cold, which pushes demand and sends prices even higher, at a time when supply can not keep up, according to Bloomberg.
Temperatures are expected to fall below 0 degrees Celsius in many European capitals during the week, requiring quantities of electricity from a system that is already struggling with low wind speeds at the level of wind farms, but also with production outages. of France’s nuclear power plants.
By making matters worse, Russia intends to keep its gas flows to one of its pipelines ending in Germany low.
Energy prices have spiraled out of control in the last months of 2021, with the price of natural gas in Europe rising by 600%. Its price continued to rise by 8.8% early on Monday morning, while on Sunday in the short-term electricity auctions the price also jumped.
In France, the price of electricity for immediate delivery reached its highest level since a rare spike in 2009, while in Germany it is the third highest in history.
Rising energy prices fuel high inflation, which is a headache for policymakers combined with the spread of the coronavirus’s Micron mutation just before the holiday season.
Geopolitical tensions between Russia and Ukraine further complicate the situation, with the possibility of a Russian invasion of the other former Soviet republic creating even greater upward pressure on prices.
Jeremy Weir, CEO of Trafigura Group, warned in November that Europe could experience staggered blackouts if the winter proved severe, before Electricite de France announced that it was shutting down 10% of its nuclear reactors. France electricity generation.
The European benchmark for natural gas, the Dutch contract, was at 149 euros per megawatt-hour, the highest level since a 40% increase on 6 October. Traders are awaiting auctions for pipeline capacity next month to assess whether Russia’s Gazprom intends to boost its deliveries in January.
Only 4% of the available capacity of the Russian pipeline ending via Belarus in Mallnow, Germany, was closed on Monday for deliveries of Russian gas, compared to 35% closed by Russia most days in December.
Temperatures in the UK, Denmark and northern Germany are expected to remain lower than usual for the season and next week. Europe now expects higher supplies of liquefied natural gas due to falling demand in Asia, but shipments will be slow to reach European ports until at least January.
Source From: Capital