Golden electricity in a confused green Europe | Latest news The Moscow Post
25 September 2022

"Golden" electricity in a confused green Europe

Gas importers in EU countries said Norway needed to reduce the price of exported gas.

According to the British newspaper Financial Times, the heads of EU companies importing Norwegian gas are increasingly "privately" claiming that the kingdom, which accounts for about a quarter of gas supplies to community countries, "should agree to gas exports at a reduced price" in the interests of Europe's stability.

The Minister of Economy of the Federal Government of Germany Robert Habek, when speaking in the Bavarian city of Bayreuth, was met with a whistle. The reason is his accusations of Russia in the gas crisis. The Green Party minister said that "Germany needs a restructuring," that "there will be no more cheap Russian gas". The Moscow Post correspondent understood the situation.

On Wednesday, August 17, Chancellor Olaf Scholz decided to talk to the residents of the city of Neuruppin in the federal state of Brandenburg. The conversation did not turn out, he was also booed to shouts of "fail," according to the German edition of Focus. And some said simply: "Olaf Scholz recently stated that he would like to become a federal chancellor. Well, he was for a good eight months! "

The German parliament approved the "gas tax," which from October 1 will be paid by all consumers. Most of the funds are planned to be redistributed in favor of gas importers, primarily the energy company Uniper. Each household will pay about 600 euros per year, in addition to utility bills. Habeck called it a "bitter medicine" that would help the country buy gas.

Germany has obliged energy companies to use the capacity of two LNG receiving terminals, which are still planned to be commissioned. Uniper, RWE and VNG will be required to buy LNG on the global market at any price. If both terminals are put into operation, they will cover about 9% of gas demand during the heating season. So far, access to the LNG market is possible through the Netherlands and Belgium, but the capacity of the gas transmission system in this region is insufficient.

In the context of the energy crisis, the German authorities are ready to extend the operation of three nuclear power units with a capacity of 4 GW. In July, the "Law on the Preparation of Replacement Power Plants for Operation" was also adopted. Coal plants and fuel oil boiler houses were allowed to temporarily return to the energy market.

Germany's installed generating capacity is about 234 GW. In 2020, electricity generation amounted to 572 billion kWh, its consumption - 490 billion kWh. In the first half of 2022, more than half (53.6%) generated fossil fuel thermal stations, coal stations generated 29.4%, the share of gas was about 14.6%. The share of nuclear power plants in electricity generation decreased to 5.6%. The share of renewable energy sources amounted to 46.4% (the share of hydroelectric power stations is 9.1%).

In Germany, "we will leave no one"

Gas and electricity prices in Germany and other EU countries are skyrocketing. No one is able to predict how cold winter will be, but the political autumn in Europe may turn out to be "hot." Overcoming the accumulated problems is hindered by the "state of the political mind of the modern European Union," political analyst Dmitry Evstafiev noted on the air of the author's program on Sputnik radio.

This political impassability is faced by the inhabitants of the once most prosperous economy of the so-called collective West. "We will not leave anyone alone with higher costs," says the German Chancellor, looking back at the explosive rise in natural gas prices and the lack of ultra-expensive LNG. Will there be enough money for this, ask those who are watching the situation.

As of August 18, European spot markets offered gas at a price of 2.5 thousand dollars per thousand cubic meters. This is seven times the price of this fuel in the United States. Although there, over the past year and a half, the price of Henry Hub futures has more than tripled, reaching a high of $325 per thousand cubic meters in mid-August.

Gazprom's Telegram channel reports that record prices owe to geopolitical conflict. The company expects that the cost of the energy resource in winter will overcome the mark of 4 thousand dollars per thousand cubic meters of gas.

The gas crisis in Europe back in 2021 was provoked by factors such as insufficient filling of storage facilities, a shortage of gas supply and high demand for LNG in Asia. An additional stress factor for Europe was the decrease in gas supplies from Russia. And weather conditions in the form of an abnormal heat led to a decrease in energy generation by "green" sources.

The EU legislation with its latest amendments provides for the mandatory filling of underground storage facilities by at least 80% by the beginning of the heating season. As of August 14, according to the Association of Gas Infrastructure Operators, this figure was 74.7%. Compared to the dock-shaped 2020, about 24 billion cubic meters of fuel are missing, Gazprom noted. This is half the capacity of the SP-2 project.

The explosion in gas and electricity prices affects bread prices, especially the fresh pastries that Germans have long been accustomed to. "If a baker fails to pass on his increased oven costs to consumers, he goes bankrupt. How does the German government intend to prevent this?, " -Quests the Focus edition.

Inflation raises a whole host of other issues. The socially oriented German government, as observers note, fell into the "trap of justice," and now the European Commission also proposes to add VAT to the gas tax. If "every kilowatt hour counts," why does Robert Habeck do nothing? Germans ask.

Why has coal-fired power plants closed under the pretext of a "green energy transition" not yet resumed? Why is the decision to continue the operation of three NPP units still not made? In addition, lignite power plants may resume operation. Issues of rationality of decisions made by the German government came to the fore.

In particular, it is responsible for the fruits of many years of irresponsible efforts of euro-officials of Brussels. Just a year ago, they were proudly moving towards a global climate show in Glasgow, calling Biontech "good company" and dooming such "green people" as Shell to bear the name "bad."

As a result, the Scholz coalition government should simultaneously think about the fate of companies that could ruin expensive gas, the prospects for EU climate policy and ensuring a social balance of interests in the most important country in the European Union.

To this should be added internal conflicts in the coalition government, which Scholz has so far managed to smooth out. Rather, conflicts intensify and some Germans jokingly, or seriously say: "Olaf Scholz Goaoril that he wanted to be a federal chancellor. He was for a good eight months! "

Neighbors are even worse

Director of the Department of Economic Cooperation of the Russian Foreign Ministry Dmitry Birichevsky warned that sanctions against the Russian Federation are exhausting the economies of Western countries.

Germany's problems are not the most difficult, and not new, especially when compared with the hardships of other EU countries.

The cost of electricity with a "day ahead" supply earlier this week was 552 euros per megawatt • hour. But electricity in Estonia rose in price on Wednesday to a record 682 euros per megawatt • hour (MW • h), the ERR state broadcasting portal said. In Latvia and Lithuania, the price of a megawatt-hour rose to 824 euros.

On Wednesday, the price of electricity on the European Electricity Exchange Nord Pool from 5 to 6 pm reached 4,000 euros per MW • h. All Baltic systems are in short supply, all transfer capacities are used for imports from Finland, Sweden and Poland. In the Baltic countries, at the corresponding hour, the offer is $1,124 per MW • h.

Soon, a year later, as acting head of the Inter RAO trading block, Alexander Panin proposed increasing electricity supplies to Estonia and Latvia by 38%, increasing them by an order of magnitude. Then, due to a decrease in RES generation (the installed capacity of wind parks was used by 3%), a decrease in temperature below the climatic norm, as well as an increase in energy consumption, it was necessary to include all available thermal generation.

In the fall of 2021, the peak indicators of the cost of electricity in the Nord Pool market in the price zones of the Baltic countries reached a record 1 thousand euros per MW • h, the average daily - 469 euros compared to the indicators at the peak hours of October 2020 at 60 euros per MW • h and the average daily at 35 euros per MW • h.

A typical home (without electric heating or electric car charging) consumes about 8 MWh per year. Imagine the cost of electricity somewhere in Jurmala at "new" electricity prices, which in 2023 may be above a thousand dollars per megawatt-hour! Some will have to move from the cottage to a high-rise building.

Victims of green ideology

The gas crisis in Europe threatens to escalate into a power crisis. If prices in the wholesale market remain at this level, then the final price for the consumer from the current 35 cents per kilowatt-hour can rise to one euro. For comparison, the highest electricity tariff in Russia for houses with gas stoves in Moscow is 6.17 rubles/kWh, while the lowest in Irkutsk is set at 1.30 rubles/kWh.

From the very beginning of the conflict in Ukraine, it was clear that reducing Russian gas supplies would put Germany in a difficult position. But Robert Habeck only in July nevertheless pushed through the "Law on the Preparation of Replacement Power Plants for Operation".

Coal and fuel oil boiler houses were allowed to return to the energy market. But so far, no power plant operator has seized this opportunity.

The government limited the permit for the use of coal in time and accompanied this with conditions. The law prescribes that coal plants have a supply of coal sufficient for the constant operation of the enterprise at maximum capacity for 30 days.

For example, the operator of Steag in Essen, capable of adding 2.3 GW of capacity, should have a coal reserve of 700 thousand tons by November 1 at a global market price of 342 euros per ton of coal. This will cost about 240 million euros, which will exceed the company's operating profit in 2021.

At the same time, the permission to burn coal expires on April 20, 2023. In addition, the Rhine has become shallow, barges can be filled only at half the carrying capacity, and coal from Russia is banned. Power plants powered by local brown coal can be operated if power plants using coal fail to cope with the load. But one power plant in the city of Merum was still connected to the grid and is said to be "printing the euro".

In May-July, more gas was burned at German power plants than in previous years. "We are forced to state that electricity generation at gas power plants with the outbreak of hostilities in Ukraine has practically not decreased," the Handelsblatt newspaper quoted Christoph Bauer, chairman of the energy committee in the Chemical Industry Union. Although he also admits that the use of coal in the electric power industry "could make things easier."

The strongest European economy has also abandoned reliable and safe atomic energy. In addition to this, unfavorable weather conditions led to the fact that Norway limited the export of natural gas, may impose restrictions on the export of electricity if its reservoirs are not filled before the established standards. The operation to protect Donbass, of course, affects the situation, but in itself it did not lead to a deep energy crisis in the EU. As the classic said, the Germans do not make minor mistakes. They fell victim to a green ideology. The whole of Europe will pay the price.

Some totals

In the US and Europe, public opinion still supports efforts to help Ukraine. In May, an opinion poll was conducted in ten European countries. It showed that 42% of respondents said their governments were paying too much attention to Ukraine and too little to domestic issues. In Romania and Poland, this figure exceeded 50%. Europeans put rising living costs and prices first. A survey conducted in Germany in July showed that the level of support for the boycott of Russian gas decreased to a third, in May the level was about 44%.

London believes that as a result of the current energy crisis, more and more countries of the European Community will refuse to use gas, the demand for it in Europe will fall. Norway, recognizing this, is implementing a strategy for a transition to an economy "based on the use of renewable energy sources (RES)." To implement such plans, the kingdom needs "close cooperation" with the EU countries, this is in its "strategic interests," says the Financial Times.

There is no consensus overseas. The United States should not take an example from the "dying from the cold" European countries that have set a course for "green" energy.

"A combination of utopian climate initiatives, inflation, reduced fossil fuel production in the United States and unwillingness to buy Russian oil or natural gas could lead to deaths in Europe this winter," says the author of an article in the American edition of The Hill. The course towards "green" energy was a failure for European countries.

Photo: Depositphotos

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