Europe struggles to counter rising energy prices

Wholesale electricity prices for 2023 in Germany and France broke records, reaching €850 and €1,000 per megawatt hour, respectively. In part, this increase is due to the decrease in Russian gas to Europe.

In addition to the cuts ordered by Putin, France has had to face closures in nuclear reactors due to corrosion problems, currently only 24 of the 56 reactors that are used to supply the country’s energy are in operation.

A year ago, the cost of a megawatt per hour was around 85 euros. Many of the thermoelectric plants use gas for the operation of the service, however, since Russia began its so-called special operation in Ukraine, it is more difficult to supply gas for energy production.

Measures to protect the French from inflation and gas prices

French President Emmanuel Macron said this week that “difficult months” await his country and that “the end of the abundance” to which they were accustomed has come. Similarly, he warned of rising energy prices as the war in Ukraine progresses.

Despite the shortage of gas and the difficulty of European countries to be self-sufficient, the French Minister of Finance, Bruno Le Maire, assured the French television channel BFM that “the increases that the president and the prime minister have spoken about minister will be limited increases.

He also said that the Government will help households that are unable to pay their energy bills. Despite the announcements, the French government will have to decide in the coming weeks whether to renew the electricity and gas price caps that expire at the end of this year and whether to maintain the fuel reduction.

At the beginning of August, the French Parliament approved the discount increase of 30 cents per liter of gasoline and diesel, they had previously announced discounting 18 cents per liter of fuel. In addition, they promised to limit the increase in electricity costs to 4% until the end of the year.

The measures have helped control inflation in France, which is at 6%, a more encouraging figure than that of its peers Spain and Germany, which register 10.8% and 7.5%, respectively.

However, these measures have generated confrontation between Parliament and the central government. Olivier Veran, a spokesman for the Macron government, said last week that France cannot “hold on to energy price caps to help households forever”.

In the UK the situation is more worrying

As of October, the energy rate ceiling in British homes will increase by 80%, in addition, gas and electricity bills could continue to increase in 2022, according to Ofgem, the electricity regulator in that country.

“The rise reflects the continued progression of global wholesale gas prices, which began with deconfinements after the Covid pandemic, and were pushed to record levels as Russia slowly cut off its gas supplies to Europe,” the agency said. .

The annual ceiling paid by an average British household will rise from 1,971 pounds to approximately 3,500 pounds, according to the authorities. Ofgem and private associations ask the Government to take measures to avoid further damage to the economy, which is registering an inflation rate of 10.1%, the highest of the G7 countries.

Self-sufficiency in Italy

Mario Draghi, Italian Prime Minister, assured on August 24 that gas reserves in that country are at 80%, very close to 90%, which they proposed to reach in October. He also said that Moscow’s cutoff would not have much of an impact during the winter in Italy because they have found various alternative sources.

Since the war broke out in Ukraine, the Italian government has made agreements to increase gas shipments from Algeria to Azerbaijan. “Last year, about 40% of our gas imports came from Russia. Today, the average is about half,” the prime minister said.

He added that, “if the installation of two new regasifiers is completed within the scheduled time, Italy will be able to be completely independent of Russian gas from the fall of 2024.”

Belgian pessimism

For his part, Alexander de Croo, Prime Minister of Belgium, is not so optimistic. Last week he warned of the difficult situation facing the continent due to uncertainty over security and gas supplies.

“The next five to ten winters will be difficult. The development of the situation is very difficult throughout Europe. Some sectors are facing serious difficulties with these high energy prices,” declared the head of the Belgian government.

The countries of the European Union (EU) have asked their citizens to save energy voluntarily to avoid mandatory cuts during the coming boreal winter. Turning off illuminated signs at night and reducing the use of equipment have been some of the proposed strategies.

In the coming days, the European Commission is expected to present a plan to deal with Russian gas cuts and to approve a cap on imported gas prices.

With AFP, Reuters and EFE