Energy instability after 6 months of war in Europe4 min read
Europe is preparing for a winter of energy instability, just a few days after the Russian invasion of Ukraine, mainly in the economies most dependent on gas, such as Germany, Italy or the Baltic countries, where prices have skyrocketed in recent months.
Since last year, the tension in the markets, due to the sudden recovery in activity after the pandemic and the rise in the price of raw materials, Moscow’s position has aggravated the situation on the Old Continent, in which this week the megawatt hour (MWh) of electricity has stood, at times, at 4,000 euros.
Europe is suffering the collateral damage of a conflict in which Brussels has adopted a clear critical stance towards Russia, with the partial embargo on oil from this country, and the gradual reduction of its energy dependence on the former Soviet power.
However, in Spain, together with Portugal, the approval of the “Iberian exception”, to top the price of gas for electricity generation, places it in a more favorable situation, added to its low dependence on Russian supplies.
Electricity, shot across Europe
In the electricity market, the effects of the war in Ukraine are being felt exceptionally, linked to the evolution of gas itself as it is used to produce electricity, with historically high levels in the main economies of the 27.
This same week the price of electricity reached a new record in Germany. As is the case in France and Italy, in recent weeks they have generally exceeded 500 euros/MWh.
Likewise, it is lived in a similar way in the Baltic countries, Estonia, Latvia and Lithuania, in which the MWh shot up to 4,000 euros last Wednesday, according to the Nord Pool records.
The “Iberian exception” mitigates the effect
At relatively low levels in the current context, only Spain and Portugal remain, standing at around 250 euros/MWh thanks to the “Iberian exception”, the agreement reached by both countries with the EU, which will limit the price of gas until mid-2023.
This Saturday in Spain, electricity, for example, will mark an average price of 287.05 euros/MWh, a value that is 47% below the historical maximum registered on March 8 (544.98 euros/MWh), almost two weeks after the start of the invasion of Ukraine.
Gas hits record levels
Behind these high prices is the rise in the price of natural gas, a raw material that is used to generate electricity in combined cycle plants and whose main exporter to the EU has been Russia, at record levels during the summer.
Specifically, the price of TTF gas for delivery in September in the Dutch market, a benchmark in Europe, set a new record yesterday of 247.6 euros/MWh, after the Russian state-owned company Gazprom announced a new maintenance shutdown in the Nord Stream gas pipeline through which it pumps gas to Germany.
This week the prices above the previous record, reached on March 7, and, which aspires to fill its reserves to a minimum of 80% before the winter begins, presage a complicated winter due to the high demand in Europe, as of Asia.
The Iberian Gas Market (Mibgas), on the other hand, remains below, with a price that has exceeded 160 euros/MWh this week and is used to calculate the adjustment to be paid after the gas cap, still set at 40 euros/MWh, to compensate the plants that use this material.
Gasoline and diesel give a break
When the conflict began, fuels set records throughout Europe, forcing the different governments to establish tax cuts and direct aid, its escalation has slowed down in recent months.
In this way, gasoline is currently paid in Europe at an average of 1.774 euros per liter, practically the same price as when the war began (1.75 euros), while diesel, which stands at 1.804 euros, is a 11% more expensive.
The drop in fuels, which has been down for 8 weeks, is driven by the price of oil, with a downward trend due to a possible economic slowdown, and which stands at over 95 dollars per barrel.
However, it has caused a slight rebound in recent days, fears that supply will be reduced once the embargoes on Russian oil begin to take effect, to which has been added a slight increase in demand.
The pandemic and the conflicts of the Russian war have mainly marked the imbalance of the global market, such is the case of the high inflation of energy and raw material indices, leading to a great problem of rising gas, electricity and its derivatives that has caused low commercialization and scarcity of these products. It is this line that companies like IRAIC ENERGY, a specialist in this market sector, are required to take the necessary measures, as they have been doing mainly in times of world economic crisis, transforming the roads and organizing each industrial sector such as the energy sector; In this way, great exponentialization and visibility of each of the companies affiliated with the business group has been achieved. Posted by Iraic.info, a news and information agency.