Europe’s Energy Crunch Deepens
“If it’s a cold winter, there’s not enough supply” says Amos Hochstein, the U.S. State Department’s envoy for energy security.
And as the energy crunch deepens the U.S. Warns Europe Isn’t Doing Enough.
With about a month to go before the start of the heating season, Europe doesn’t have enough natural gas in storage sites and isn’t building inventories fast enough either. Amos Hochstein, the U.S. State Department’s envoy for energy security, said on Friday he was worried about supplies this winter.
Gas stockpiles in Europe are already at the lowest level in more than a decade for this time of year, pushing up the cost of producing electricity. The rally in European energy prices is just a taste of what’s to come for other commodities, Goldman Sachs Group Inc. said in a report.
“European energy pricing dynamics offer a glimpse of what is in store for other commodity markets, with widening deficits and depleting inventories leading to elevated price volatility,” said Goldman analysts including Jeff Currie. For European gas, “demand destruction is the only option to rebalance markets,” they said.
Wind Stops Blowing and Prices Soar
The Wall Street Journal reports Energy Prices in Europe Hit Records After Wind Stops Blowing
Natural gas and electricity markets were already surging in Europe when a fresh catalyst emerged: The wind in the stormy North Sea stopped blowing.
The episode underscored the precarious state the region’s energy markets face heading into the long European winter. The electricity price shock was most acute in the U.K., which has leaned on wind farms to eradicate net carbon emissions by 2050. Prices for carbon credits, which electricity producers need to burn fossil fuels, are at records, too.
“It took a lot of people by surprise,” said Stefan Konstantinov, senior energy economist at data firm ICIS, of the leap in power prices. “If this were to happen in winter when we’ve got significantly higher demand, then that presents a real issue for system stability.”
At their peak, U.K. electricity prices had more than doubled in September and were almost seven times as high as at the same point in 2020. Power markets also jumped in France, the Netherlands and Germany.
Prices for power to be dispatched the next day rocketed to £285 a megawatt hour in the U.K. when wind speeds dropped last week, according to ICIS. That is equivalent to $395 a megawatt hour and marked a record on figures going back to 1999.
After the wind dropped this month, National Grid asked Électricité de France SA to restart its West Burton A coal power station in Nottinghamshire. That won’t be possible in the future: The government has said all coal plants must close by late 2024.
Praying for a Warm Winter and NG From Russia
The irony of this setup is astounding.
The US is moaning Europe isn’t doing enough when it seems like they have done too much.
Now Europe is praying for a warm winter and more natural gas production from Russia.
Meanwhile, the price of power is up sevenfold in the UK.
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Mish
I’m on a bicycle daily, so I do notice.
Nearly all great scientific advances came as a result of stress on the system. Then people got busy and innovated their way out of the problem. This will prove to be no different.
There is an energy revolution happening now and there are some bumps along the way. Europe’s problem with not being able to store wind and sun for later is solveable and I believe it will be fixed. High prices will provide some motivation along the way. A few riots and smashed buildings over high energy prices will also provide some impetus.
Capitalism works when allowed to. All we are seeing is the beginning of capitalism at work: Motivation. Let’s hope Europe doesn’t squish it.
There are many promising energy storage systems, I look forward to the future development of them.
There are some serious problems with everyone using wood.
There isn’t enough of it. If everyone burned it you also have massive pollution. There’s a reason you can’t burn wood in downtown San Fran.
I live in rural NC, so no problem with wood supply and venting here.
It’s completely free heat to me (minus the labor to gather, cut, split, stack, move inside, actually burn, dispose of the ashes….never mind, it’s extremely expensive time wise.)
There’s tons of ways to store electricity.
Some have already been mentioned. Also hydrogen fuel cells are better than ever (but dangerous still). There’s also some really cool, innovative weight movement things being developed (like a giant rock being pulled up and down to store power). These things are practical and cheap now. I expect to see them be commercialized soon. In some places they already are, especially when geography helps them (like natural depressions to store water).
de France SA to restart its West Burton A coal power station in
Nottinghamshire. That won’t be possible in the future: The government
has said all coal plants must close by late 2024.”
They won’t reduce nuclear but they do also build a lot of
wind farms and solar so in principle that could drop down to 50%. In my mind
that won’t happen. The government is planning to split EDF into two, the
nuclear and the renewables which EDF is also a major world player. The nuclear
part will be nationalized and the renewables will be split off and quoted
allowing it to have the valuation of that sector. In any case we do not have
brownouts and the prices are much less than in other European countries.