The energy crisis in Europe is getting worse

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The European energy crisis intensified as the risk of war pushed up gas prices, power outages were extended and the French government asked the largest utility company to receive a $ 8.8 billion blow to consumer protection. .

Energy and gas prices rose on Friday as the prospect of military action in Ukraine escalated as geopolitical tensions escalated.

Meanwhile, the nuclear power company Electricite de France recorded the biggest drop in its history, as the government stressed that it had to sell energy at a big discount, while several reactors faced major outages.

“The risk of a possible new war in Ukraine and the impact this could have on the energy market continue to cause great uncertainty,” analysts told Energi Danmark.

German electricity in the third quarter rose by up to 25%, while key gas prices in Europe rose by 13%.

Energy prices in Europe are extremely volatile. The region’s gas reserves are declining faster than expected, increasing the focus on imports from Russia and raising concerns that supplies will fall if the weather worsens.

Market pressures extend beyond winter. French and German energy prices rose from April onwards, with fewer nuclear reactors available to supply electricity.

The impact on households of bills across the continent has left governments struggling to find ways to help consumers protect themselves against higher costs.

In France, the government is asking the EDF to sell more energy at a discount to market prices.

Finance Minister Bruno Le Maire said the rise in electricity prices for households and micro-enterprises would reach a 4% ceiling this year, including € 8 billion in tax cuts on electricity consumption.

Without the moves, prices would have risen by 35% from February 1st.

And EDF’s problems continue. During the once-a-decade maintenance of the Civaux and Penly reactors, the company identified failures in welding the piping.

Checking and repairing them takes more time than expected, leaving the market with supply shortages and EDF without revenue from these units. The profit margin is expected to reach around 6 billion euros, according to Jefferies International.

“The biggest disruptions to nuclear power will deepen and extend the ongoing energy crisis in Europe,” said Arne Bergvik, chief analyst at Sweden’s Jamtkraft.

“The news has such a big impact because of the tense situation for other fuels like gas or coal that they have to make up for lost nuclear energy production.

In the European gas market, all eyes are on Russian flows, with fears mounting of a possible conflict in Ukraine – a key transit country. The United States is pressuring European allies to agree on possible sanctions against Russia, worrying that the country may soon invade its neighbor – although Russia has repeatedly stated that this is not its plan.

Talks between the United States and Moscow this week have failed to ease tensions.

At the heart of the supply concerns is the newly built Nord Stream 2 pipeline, which will not transport Russian gas to Germany until regulatory approvals are completed.

On Thursday, the US Senate blocked a measure to impose new sanctions, after the Biden government warned that it could disrupt the unity of the allies in the controversy over Ukraine.

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Source From: Capital

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