Europe is facing a deepening energy crisis partly because of the Russia-Ukraine war as Moscow has suspended natural gas supplies in response to economic sanctions imposed by the West.
Governments are trying to diversify supplies and introduce measures to reduce demand and save energy.
Europe could face a shortage of as much as 30 billion cubic meters (bcm) of natural gas when the continent refills gas storage sites during the key summer period next year, the International Energy Agency (IEA) said Thursday in a new analysis.
The analysis, “Never Too Early to Prepare For Next Winter: Europe’s Gas Balance for 2023-24,” highlighted the need for urgent action by governments to reduce consumption amid the global energy crisis.
Although EU gas storage sites are now 95% full -- putting them 5% above the five-year average fill level, the report cautioned that the cushion provided by current levels, as well as recent lower gas prices and unusually mild temperatures, should not lead to overly optimistic conclusions about the future.
The IEA warned that the process of filling storage sites this year benefitted from key factors that may not be repeated in 2023, including Russian pipeline gas deliveries that, although cut sharply during 2022, were close to “normal” levels for much of the first half of the year.
Total pipeline supply from Russia to the EU in 2022 is likely to amount to around 60 bcm, but it is highly unlikely that Russia will deliver another 60 bcm of pipeline gas in 2023 -- and Russian deliveries to Europe could halt completely, according to the analysis.
Here are the other developments on the energy front in Europe.
- EU
The EU announced Thursday an energy support package of €1 billion ($1 billion) to help the Western Balkans deal with the spiraling energy crisis.
European Commission President Ursula von der Leyen and High Representative Josep Borrell participated in the Western Balkans Summit in the context of the Berlin Process.
''The EU continues to stand behind the Western Balkans – both in good times and in hardship. Today we are putting together a €1 billion energy support package to protect the most vulnerable groups and boost much-needed investments in energy diversification. We are investing in the economic fabric of the region to advance in the clean energy transition and come out greener, stronger, and more sustainable from the current crisis,'' said Von der Leyen.
Addressing the immediate consequences of the energy crisis and building resilience in the short- and medium-term, the Commission is ready to provide €500 million in budget support, which will be adopted in December and available in January.
The EU aims to support households and small- and medium-sized enterprises to cushion energy price increases and their effect.
Over the short- and medium-term, the Commission will provide another €500 million to advance energy diversification, renewable energy generation and gas and electricity interconnections through the Western Balkans Investment Framework.
''Short-term measures in the next 1-2 years will support diversification of energy supplies, by boosting gas and electricity interconnectors including LNG as well as by supporting the construction of renewable energy projects and the energy efficiency measures,'' it said. ''The medium-term assistance in the next 2-3 years will include other investments contributing to the energy transition and security. These measures will cover large-scale renewable energy generation projects, upgrade of energy transmission systems, district heating, and schemes for energy efficiency for the old blocks-of-flats.”
Borrell said the EU stands with the Western Balkans in addressing the wider consequences of Russia’s aggression against Ukraine and its weaponization of energy.
- Germany
The soon-to-be nationalized German energy company, Uniper, is looking to build a power plant in Sweden, media reports said Thursday.
The decision comes amid a dispute in the government about the future of nuclear power as an alternative in the energy crisis.
It was only thanks to intervention by Chancellor Olaf Scholz that the operating licenses for three German nuclear power plants were extended in October against the opposition of coalition partner, the Greens. The supply of new fuel rods, however, is still unclear.
Due to the energy crisis, the three German power plants are expected to continue running until next April. After that, Germany plans to phase out nuclear energy. That decision came in 2011 after the Fukushima nuclear disaster in Japan.
The fact that a soon-to-be state-owned company now wants to build a new nuclear power plant in Sweden could cause further strife in Germany's governing coalition.
Sweden’s Energy Minister Ebba Busch told Swedish public TV SVT that it was gratifying that Uniper responded so quickly to the new Swedish government's invitation to energy companies and is already planning to build a new nuclear power plant in the southern province of Skane.
Uniper reported a loss of around €40 billion ($39 billion) in the first nine months of the year, affected by reduced Russian gas deliveries, according to the financial results statement released Thursday.
The decline is mainly attributable to the gas business, which was adversely affected by high replacement costs due to curtailed gas deliveries from Russia between June 14 and Sept. 30, according to the company.
The company explained that the adverse effect was further exacerbated in the third quarter by the complete cessation of gas deliveries.
The announced net loss contains roughly €10 billion of realized costs for replacement volumes and roughly €31 billion of anticipated future losses from valuation effects on derivatives and provision built-ups related to Russian gas curtailments as of Sept. 30.
The Federal government of Germany also agreed Wednesday to set a cap on energy prices to relieve consumers and companies in the face of high energy prices and inflation.
Prime Minister Olaf Scholz announced that the country agreed to put a limit on natural gas and electricity prices.
The gas and electricity price cap will be financed through the Economic Stabilisation Fund (WSF), which was set up to help companies during the coronavirus pandemic.
Scholz said the cost of the new measures will total €200 billion.
Gas prices will be capped at €0.12 per kilowatt-hour from March 2023 until at least the end of April 2024.
A gas limit will be applied for large industrial companies from January. For 25,000 large industrial gas consumers, 70% of the average consumption last year will be subsidized.
For electricity, a price ceiling of €0.40 per kilowatt-hour will be applied to 80% of the previous year's consumption by households and small companies.
For industrial companies, the price ceiling will be €0.13 per kilowatt-hour.
In addition, a €49 per month public transport ticket will be provided nationwide from January to reduce carbon emissions and help residents cope with rising inflation.
The € ticket, which will be valid throughout Germany, will be funded by federal and state governments and is estimated to cost €3 billion.
- France
After calling on households to be energy sober by adopting economic gestures at their level, the government presented at the Council of Ministers a bill to accelerate the construction of new nuclear reactors and simplify procedures for installation.
The new law, presented Wednesday, will be debated in parliament in early 2023 and should allow the commissioning of six new EPRs (European Pressurized Reactor) spread over three sites.
President Emmanuel Macron, who had already mentioned his desire to further develop the French nuclear fleet in 2021, wants to go faster, while the country is facing a surge in energy prices coupled with a serious fear of shortage for the coming winter, against the backdrop of the Russia-Ukraine war.
By Busra Nur Cakmak
Anadolu Agency
energy@aa.com.tr
