Europe is bracing for energy shortages as freezing weather sets in, boosting demand and sending prices surging at a time supply just can’t keep up.
Temperatures are forecast to fall below zero degrees Celsius in several European capitals this week, straining electricity grids already coping with low wind speeds and severe nuclear outages in France.
To make matters worse, Russia intends to keep natural gas flows through a major transit route to Germany limited on Monday after capping supplies over the weekend.
Energy prices have spiraled out of control this year, with European gas prices surging some 600%. Prices surged as much as 8.8% early Monday, while short-term electricity prices jumped in auctions Sunday.
In France, power for delivery on Monday rallied to its highest level since a rare spike in 2009, while Germany prices were the third-highest on record.
Rising prices have fueled inflation, a headache for policymakers already contending with the spread of the coronavirus omicron variant just before the holiday season.
Geopolitical tensions between Russia and Ukraine could also make things worse, with a potential invasion likely to send prices even higher.
Jeremy Weir, chief executive officer of commodities trader Trafigura Group, last month warned that Europe could experience rolling blackouts in case of a cold winter.
And that was before Electricite de France SA said it was halting reactors accounting for 10% of the nation’s nuclear capacity, leaving the region at the mercy of weather at the height of winter in January and February.
Benchmark Dutch gas prices jumped to almost 149 euros a megawatt-hour, the highest for a most-active contract since a 40% surge on Oct. 6.
Traders are also on edge as auctions for pipeline capacity next month will provide an indication as to whether Gazprom PJSC intends to boost supplies in January.
With nuclear outages biting, electricity producers will have to use more gas to keep the lights on.
But Russia plans to keep flows into Germany via the key Yamal-Europe pipeline capped, potentially forcing Europe to reply on its already depleted gas inventories. Storage sites are only 60% filled, a record low for this time of year.
Only 4% of capacity was allocated for Monday to send gas through Germany’s Mallnow station, where the pipeline crossing Belarus and Poland terminates. That compares with about 35% of the capacity that Russia has booked for most days this month.
And there’s no relief in sight. Temperatures are expected to remain below normal levels in the U.K., Denmark, and northern Germany next week.
While traders expect more liquefied natural gas to come to the rescue due to lower demand in Asia, cargo diversions will take some time and increased arrivals at European ports are unlikely to come before January.
Read rest at Bloomberg
And while the king lived in Luxery the people froze and starved
Feel very sad for the poor and needy but certainly nothing for the mindless “leaders’. They have all rushed off to chase a pie in the sky idea with wind and solar to appease the green leftists. Here in Australia we are on the same idiotic path, how anyone can call wind turbines and solar panel green or clean energy is madness they are neither. A quick glance of mining, preparation and fabrication show a vastly different story. Then the ‘minor’ fact that they cannot be recycled is also a real concern
Where in the world did the progressives get their name? Trojan horses is what they are.