Electricity prices in Europe hit record highs as energy crisis deepens


London
CNN Business

Electricity prices in Europe continue to hit records, intensifying the region’s energy crisis and stoking fears over access to electricity and heating as the weather begins to cool.

Electricity prices in Germany for next year, which are considered the European benchmark, briefly topped €1,000 ($999.80) per megawatt-hour on Monday before falling back to €840 ($839.69) per megawatt hour.

“It’s not normal at all. It’s incredibly volatile,” said Fabian Rønningen, senior analyst at Rystad Energy. “These prices are now reaching levels we thought we would never see.”

Prices have jumped since Russia’s Gazprom announced it would shut down the Nord Stream 1 gas pipeline for three days from Wednesday to carry out maintenance work, rekindling fears that Moscow could completely cut off gas to Europe, which rushes to stock up on supplies before winter. .

When the crucial pipeline was taken offline for repairs for 10 days in July, many policymakers feared it might not return. When Russia restarted operations, the flows were drastically reduced.

France’s nuclear sector, which supplies about 70% of the country’s electricity, is also struggling with a drop in production, which is driving up energy prices in the country.

The Czech Republic announced on Monday that it will convene an emergency meeting of European energy ministers in Brussels next week as the region seeks solutions.

Businesses fear they will have to periodically shut down operations during the winter in the event of a power shortage, while households could struggle to pay rising heating bills. The fallout could trigger a deep recession.

There were reasons for optimism on Monday. German Economy Minister Robert Habeck said the country’s gas stocks were filling up and the country would not have to pay the high prices currently imposed by the market.

Gas storage facilities in Germany are almost 83% full and will reach the 85% threshold in early September, according to Habeck.

But huge uncertainty remains. High electricity prices for next year indicate that traders do not believe the crisis will be contained in the coming months, according to Rønningen.

“We may well have a number of winters where we will have to find solutions one way or another,” Shell CEO Ben van Beurden told a press conference on Monday. in Norway.

Uniper, Germany’s biggest importer of natural gas, said on Monday it would need more help from the government, asking for an additional 4 billion euros ($4 billion). The company said it was cash-strapped due to a lack of Russian exports, forcing it to pay exorbitant market prices to fill supply gaps.

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