MAP OF THE DAY: Day-ahead electricity prices in Europe are eye-watering, with lots of countries setting record highs for today. Notable to see the Nordics close to €400 per MWh, and Germany at €600. Before 2020, anything above €75-100 was considered expensive – @JavierBlas
Mailchi –
1) Energy panic engulfs Europe as power prices smash new record
Bloomberg, 22 August 2022
2) Half of UK households face fuel poverty, EDF warns
BBC News, 23 August 2022
3) Green Britain: Energy bills to hit £6,500 a year by April, new forecast warns
The Daily Telegraph, 23 August 2022
4) UK industry faces energy shutdown – leaked memo exposes horror scenario for next PM
Daily Express, 23 August 2022
5) ‘Political suicide’: Germany will shutter nuclear plants despite looming winter shortages
Daily Caller, 22 August 2022
6) Germany reactivates coal-fired power plant to save gas
Deutsche Welle, 22 August 2022
7) Germany to prioritize coal trains over passenger services
Bloomberg, 21 August 2022
8) As Europe returns to coal China boosts its coal production
Reuters, 22 August 2022
9) Declaration saying “There is no climate emergency” trends on Twitter – Greenies have meltdown
Chris Morrison, Daily Sceptic, 23 August 2022
10) Francis Menton: You can be sure that Net Zero will never be achieved. Here’s why.
Manhattan Contrarian, 22 August 2022
1) Energy panic engulfs Europe as power prices smash new record
Bloomberg, 22 August 2022
European gas and power prices surged as panic over Russian supplies gripped markets and politicians warned citizens to brace for a tough winter ahead.
Benchmark gas settled at a record high, while German power surged to above 700 euros ($696) a megawatt-hour for the first time. Russia said it will stop its key Nord Stream gas pipeline for three days of repairs on Aug. 31, again raising concerns it won’t return after the work. Europe has been on tenterhooks about shipments through the link for weeks, with flows resuming only at very low levels after it was shut for works last month.
“The catastrophe is already there,” Thierry Bros, a professor in international energy at Sciences Po in Paris, said. “I think the major question is when EU leaders are going to wake up.”
In one of the most dire warnings yet, Belgian Prime Minister Alexander De Croo said Europe could face up to 10 difficult winters. It would put sustained stress on major economies and leave thousands of households struggling to pay their bills. Concerns over the economy pushed the euro currency to a two-decade low on Monday, while inflation is at the highest in years.
Europe finds itself in a precarious situation with the official start of the winter heating season just over a month away. Nations are rushing to fill storage sites, but they are still heavily dependent on Russian gas and any further cutbacks could make rationing a reality.
French President Emmanuel Macron warned people of the potential hardships in the coming months, and asked them to “accept paying the price for our freedom and our values,” he said in a speech Friday commemorating the liberation of a town in southern France in World War II.
Germany’s circumstances are particularly urgent: the country’s dependence on Russian gas leaves it vulnerable as it desperately searches for alternative supplies. The nation is considering restarting coal-fired power plants and may extend the life of remaining nuclear power plants, while urging gas conservation. Industries in Europe’s biggest economy are already take a major hit.
“Being the powerhouse of Europe, the combination of industrial exposure, married with energy intensive industries, means that there could be a significant hit to Germany as the crisis continues,” said Martin Devenish, a former Goldman Sachs Group Inc. managing director who now works for S-RM Intelligence & Risk Consulting Ltd. “The currency markets are already pricing in a fair amount of risk in Europe, and that’s partly energy related”.
If the energy crisis worsens, a recession is likely next winter, Bundesbank Chief Joachim Nagel said over the weekend. Further gas supply cuts could be coming, German Economy Minister Robert Habeck said, reiterated a call to conserve energy. “We have a very critical winter right in front of us,” he told public broadcaster ZDF in Montreal, during a visit to Canada with Chancellor Olaf Scholz. “We must expect Putin to further reduce gas.”
On Friday, Gazprom said works are needed in the only functioning turbine that can pump gas into Nord Stream. The pipeline has been operating at only 20% capacity for weeks and European politicians insist the curbs are politically motivated. Russia’s Gazprom PJSC said volumes would return to that level following the latest shutdown.
“The market may disregard Gazprom’s comments and start to consider whether the pipeline may not return to service, or at the very least may be delayed for any given reason,” said Biraj Borkhataria, an analyst at RBC Capital Markets.
Full story
2) Half of UK households face fuel poverty, EDF warns
BBC News, 23 August 2022
Half of UK households are facing fuel poverty this winter unless the government does more to help with energy bills, EDF has warned.
Philippe Commaret, a senior executive at EDF Energy UK, said without further support, people face a “catastrophic winter”.
Energy bills are predicted to be nearly three times higher than last winter.
A household is considered to be in fuel poverty if it has to spend 10% or more of its disposable income on energy.
From October, all UK households will start receiving payments providing a £400 discount on their fuel bills, with eight million low-income households set to receive an additional £650.
But the Liberal Democrats, Labour and most major energy suppliers are calling for further support for households, including for the energy price cap to be frozen at current levels.
The government has said no further measures will be announced before a new prime minister is in place from 5 September.
Mr Commaret, EDF Energy UK’s managing director for UK customers, told the BBC the current level of support was “much too low” and called for additional help to be provided, including short-term help with bills and longer-term solutions such as better insulation for homes.
EDF had seen a 30% rise in calls from customers under stress and struggling to pay their bills, he said.
“All ideas to keep bills for customers flat should be considered,” Mr Commaret said.
“Without further support from the government, more than half of UK households will likely be in fuel poverty by January.”
“By way of context, I have to mention that we face, despite the support that the government [has] already announced, a dramatic and catastrophic winter for our customer,” he said.
3) Green Britain: Energy bills to hit £6,500 a year by April, new forecast warns
The Daily Telegraph, 23 August 2022
The energy price cap will hit £6,500 a year in April after a fresh surge in gas prices added to the misery for British households, according to new forecasts.
The price cap will be set at £6,552 next April – almost £500 higher than previously feared – consultancy Auxilione said.
It comes after wholesale natural gas prices spiked yesterday as Russia said it would shut down the Nord Stream pipeline for maintenance work for three days next week.
It marks the latest cut to supplies through the key gas link to Germany and fuelled fears that Putin will cut off supplies to the continent completely.
Auxilion said it now expects the price cap to rise to £3,576 from the start of October, hitting £5,066 in January before rising even further to £6,552 from April.
Regulator Ofgem will confirm the price cap for October on Friday, with analysts widely expecting prices to top £3,500.
The figures will add to the squeeze on household budgets and pile more pressure on the Government to provide more support for families.
4) UK industry faces energy shutdown – leaked memo exposes horror scenario for next PM
Daily Express, 23 August 2022
ENERGY-INTENSIVE industries face having to slow or shut down entirely due to soaring energy costs and the government was warned even prior to Putin’s invasion of Russia, sources claim.
“Project Shine” was first commissioned by the Treasury last year as fears around rising energy prices began to rise due to the pandemic.
Two sources cited by Bloomberg have now revealed that briefings by the project warned ministers of the approaching disaster in November 2021 – well ahead of Putin’s invasion of Ukraine, which has exacerbated the crisis.
The briefings informed ministers that industries including chemical and fertilizer manufacturers were particularly at risk, and faced having to slow down their operations or shut down entirely due to increased operating costs.
The warnings raise concerns about Mr Johnson’s heeding of their warnings, as well as questions about how the next PM will respond.
British industry is not protected by a price cap on energy like households, leaving heavy electricity users such as shops and restaurants vulnerable to shifts in the wholesale energy market.
Bloomberg’s sources add that a plan had been drawn up to extend a subsidy program to alleviate the issue, with funding proposals including through taxation or a levy on household energy bills.
However, it appears neither will be introduced by the current government, with one of the sources claiming it will be up to Mr Johnson’s successor to decide whether to make changes necessary to save struggling businesses.
The government this month announced a consultation on other potential ways to reduce electricity bills for industries.
A spokesperson for the government defended its response to last years’ warnings.
They pointed to the £145 million of extra support given to energy-intensive industries in April 2022.
This intervention came after the invasion of Ukraine pushed prices even higher.
The spokesperson added: “Ministers and officials continue to engage constructively and regularly with industry and our priority is to ensure costs are managed and supplies of energy are maintained”.
Fertiliser industries are of particular concern due to a combination of high prices and lower demand, as well as high manufacturing costs.
For some manufacturers, energy bills take up 12 percent of their cost.
The knock-on effect of higher prices for fertiliser piles on already surging operational costs for farmers – leading in turn to higher food prices.
Full story
5) ‘Political suicide’: Germany will shutter nuclear plants despite looming winter shortages
Daily Caller, 22 August 2022
German Economy Minister Robert Habeck said on Sunday that the government is unlikely to delay shutting down its three remaining nuclear plants despite the nation’s desperation to shore up its energy security, according to Reuters.
Germany is urging its citizens to cut energy usage in preparation for a harsh winter.
“It would be political suicide for them to not keep the plants online,” Dr. Benny Peiser, director of Net Zero Watch told the Daily Caller News Foundation.
German Economy Minister Robert Habeck said on Sunday that the country is unlikely to delay shutting down its three remaining nuclear plants, which are scheduled to close at the end of the year, despite its scramble to save energy ahead of winter, according to Reuters.
Habeck, who is a member of Germany’s Green Party, told citizens that keeping the plants running would only save about 2% of German gas use during the government’s open-door day in Berlin, Reuters reported. Habeck deemed that the gas savings were not substantial enough to warrant delaying the shutdown due to the existing German consensus against nuclear energy.
“The main policy agenda of Habeck’s party is to close nuclear power plants, so it would be difficult for them to U-turn on this agenda,” Dr. Benny Peiser, director of Net Zero Watch told the Daily Caller News Foundation. “They care more about getting rid of nuclear energy than climate change … because they are now going back to using coal.”
Habeck argued that keeping the plants open was the “wrong decision given how little we would save,” according to Reuters. Nevertheless, the economy minister declared that he was willing to prolong the lifespan of one nuclear reactor in Bavaria if a stress test of the nation’s power supply determined that it was necessary. The test’s findings, which will determine how well the nation will fare if Russia cuts off the supply of natural gas this winter, are expected in the next few weeks.
Previously, it was reported that Germany was seriously considering keeping the plants operating past their scheduled closure in an effort to bring down the nation’s skyrocketing energy prices. However, the German Federal Ministry for Economic Affairs and Climate Protection directly denied this in an Aug. 16 press release.
“The government would not survive the winter if they shut down the plants … it would be political suicide for them to not keep the plants online,” stated Peiser.
Habeck also told the public not to be alarmed about the possibility of a gas shortage during the colder months, saying that if businesses and households cut their usage by 15% to 20% Germany has “a really good chance of making it through the winter,” reported German media outlet Deutsche Welle.
“The government is underestimating the energy crisis that will cause severe harm to millions,” Peiser said.
Former Chancellor Angela Merkel introduced legislation with the support of the majority of voters to terminate the use of nuclear power by the end of 2022. However, as Russia continues to reduce its gas deliveries through the Nord Stream 1 pipeline, Germany is scrambling to increase its fuel supplies in preparation for winter.
Germany accused Russia of restricting energy supply to raise prices as a response to European sanctions put in place following Moscow’s invasion of Ukraine. Russia denies this, attributing the situation to both technical issues and Western sanctions.
“They are under huge public pressure to keep the plants running,” Peiser stated.
Germans are becoming increasingly open to expanding the use of nuclear power as their nation’s energy crisis worsens. An August poll conducted by a German political institute showed that only 15% of those surveyed want the nuclear plants to be switched off as planned on Dec. 31, 2022. Additionally, the poll showed that 41% of Germans support the extension of the remaining plants for several months, while another 41% would support the use of nuclear energy in the long term.
Full story
6) Germany reactivates coal-fired power plant to save gas
Deutsche Welle, 22 August 2022
Germany plans to phase out coal-fired power generation by 2038, but now a second plant will be back in service next week under a new regulation aimed at saving gas.
Germany is restarting another coal-fired reserve power plant next week as the country tries to save up its gas supplies for the coming winter.
The Heyden plant in Petershagen, near Hanover in northern Germany, is scheduled to return into service from August 29 until the end of April, operator Uniper said on Monday.
With a capacity of 875 megawatts, Heyden is one of the most powerful coal-fired power plants in Germany. It started operation in 1987.
Germany plans to phase out coal-fired power generation by 2038 at the latest. However, the war in Ukraine and the resulting disruptions to the energy market are causing some plants to be temporary reactivated.
Since July 14, a regulation has allowed coal-fired power plants from the so-called grid reserve to come fully back online to help the country save gas. Plants on the reserve only produce electricity when this is necessary to ensure grid stability.
Coal instead of gas
At the beginning of August, the Mehrum plant in Hohenhameln, owned by the Czech energy group EPH, became the first coal-fired plan to return to service.
According to the German business newspaper Handelsblatt, the Essen-based company Steag had also announced that it intended to bring reserve coal-fired power plants back onto the market.
More coal-fired plants that had been placed in reserve are set to restart in the coming weeks. The government says this will allow gas storage facilities to be filled as Germany copes with reduced flows from Russia.
According to the Federal Network Agency, the country’s energy regulator, gas accounted for 9.8% of electricity generation in July. However, gas makes up the largest share of home heating systems in Germany.
Full story
7) Germany to prioritize coal trains over passenger services
Bloomberg, 21 August 2022
Germany plans to give coal trains priority over passenger services on its rail network as it struggles with an energy crunch that’s threatening the economy, the Welt am Sonntag newspaper reported, citing a draft proposal.
Priority is normally given to passenger transport in Germany, and timetables are geared toward it. As a result there’s a risk of chaos on the rails from making the change, according to the draft.
Germany faces an historic energy crisis, which has fueled inflation and put the country on the brink of a recession. Russia has drastically cut natural gas flows on the key Nord Stream 1 pipeline amid its war in Ukraine. And hot and dry weather has hampered fuel transportation via Europe’s main rivers.
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