EU braced for pandemonium as Yellow Vests chaos to spread across Europe
In this newsletter:
1) Energy prices in Europe hit records after the wind stops blowing
The Wall Street Journal, 13 September 2021
2) EU braced for pandemonium as Yellow Vests chaos to spread across Europe
Daily Express, 13 September 2021
The Wall Street Journal, 13 September 2021
2) EU braced for pandemonium as Yellow Vests chaos to spread across Europe
Daily Express, 13 September 2021
3) Europe’s ambitious Net Zero pledges hit home—with eye-watering energy bills
Fortune, 11 September 2021
6) WATCH: John Constable's evidence to the House of Lords inquiry into the cost of Net Zero
GWPF, 14 September 2021
Fortune, 11 September 2021
4) UK electricity prices now most expensive in Europe
S&P Global, 14 September 2021
S&P Global, 14 September 2021
5) UK factories may have to switch to diesel generators as energy prices rocket
The Daily Telegraph, 14 September 2021
The Daily Telegraph, 14 September 2021
GWPF, 14 September 2021
7) And finally: In 'Green' Germany coal is primary electricity source again
Deutsche Welle, 14 September 2021
Deutsche Welle, 14 September 2021
Full details:
1) Energy prices in Europe hit records after the wind stops blowing
The Wall Street Journal, 13 September 2021
Heavy reliance on wind power, coupled with a shortage of natural gas, has led to a spike in energy prices
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 sudden slowdown in wind-driven electricity production off the coast of the U.K. in recent weeks whipsawed through regional energy markets. Gas and coal-fired electricity plants were called in to make up the shortfall from wind.
Natural-gas prices, already boosted by the pandemic recovery and a lack of fuel in storage caverns and tanks, hit all-time highs. Thermal coal, long shunned for its carbon emissions, has emerged from a long price slump as utilities are forced to turn on backup power sources.
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 $395 a megawatt hour and marked a record on figures going back to 1999.
Full story ($)
2) EU braced for pandemonium as Yellow Vests chaos to spread across Europe
Daily Express, 13 September 2021
BRUSSELS has been warned of increasing discontent across the bloc over fears of EU-wide Yellow Vests protests.
Carbon prices across the EU are reaching record-high levels as energy companies prepare to comply with the EU Commission's new Fit for 55 green rules. The issue is set to spark a clash between the EU executive and the European Parliament where the legislation will be discussed on Tuesday.
Across the EU protests are already erupting against an increase on energy bills, with Spaniards currently taking the lead on the streets of the country.
The daily average price of electricity in the wholesale market broke a new historical record last month in Spain, reaching €124.45 per megawatt per hour (MWh).
Carbon dioxide is also getting ever more expensive in Poland topping €60 for a ton, 12 times more than four years ago.
Polish Prime Minister Mateusz Morawiecki blamed the EU for the rising prices at a conference last week.
He said: "We have here the very expensive climate policy of the European Union."
Spanish Vice President and Finance Minister Nadia Calviño warned of "social unrest" across the bloc unless Brussels ensures the "green transition" is also "a socially fair transition".
She told reporters: “We need to be very mindful of the need to adjust our rules … to ensure that we avoid situations such as the one we are living right now with a very strong increase of CO2 prices and also gas prices.
"That’s obviously creating unrest in our populations and pressing … governments to take measures … to minimise the negative impact on household incomes and on the competitiveness of companies, in particular SMEs.”
Fears the increase in prices could spark EU-wide Yellow Vests protests across the bloc are rising among some EU Commissioners.
Full story
Daily Express, 13 September 2021
BRUSSELS has been warned of increasing discontent across the bloc over fears of EU-wide Yellow Vests protests.
Carbon prices across the EU are reaching record-high levels as energy companies prepare to comply with the EU Commission's new Fit for 55 green rules. The issue is set to spark a clash between the EU executive and the European Parliament where the legislation will be discussed on Tuesday.
Across the EU protests are already erupting against an increase on energy bills, with Spaniards currently taking the lead on the streets of the country.
The daily average price of electricity in the wholesale market broke a new historical record last month in Spain, reaching €124.45 per megawatt per hour (MWh).
Carbon dioxide is also getting ever more expensive in Poland topping €60 for a ton, 12 times more than four years ago.
Polish Prime Minister Mateusz Morawiecki blamed the EU for the rising prices at a conference last week.
He said: "We have here the very expensive climate policy of the European Union."
Spanish Vice President and Finance Minister Nadia Calviño warned of "social unrest" across the bloc unless Brussels ensures the "green transition" is also "a socially fair transition".
She told reporters: “We need to be very mindful of the need to adjust our rules … to ensure that we avoid situations such as the one we are living right now with a very strong increase of CO2 prices and also gas prices.
"That’s obviously creating unrest in our populations and pressing … governments to take measures … to minimise the negative impact on household incomes and on the competitiveness of companies, in particular SMEs.”
Fears the increase in prices could spark EU-wide Yellow Vests protests across the bloc are rising among some EU Commissioners.
Full story
3) Europe’s ambitious Net Zero pledges hit home—with eye-watering energy bills
Fortune, 11 September 2021
Running out of gas as the cost of energy hits record highs, Europe is facing a "power crunch"—one that has been years in the making. As the global demand for gas soars, Europe’s uptake of intermittent renewable energy sources such as wind and solar, combined with its aggressive shutdown of coal and heavy EU carbon taxation, has caused its electricity supply to tighten.
Fortune, 11 September 2021
Running out of gas as the cost of energy hits record highs, Europe is facing a "power crunch"—one that has been years in the making. As the global demand for gas soars, Europe’s uptake of intermittent renewable energy sources such as wind and solar, combined with its aggressive shutdown of coal and heavy EU carbon taxation, has caused its electricity supply to tighten.
The continent's gas crunch is causing extreme volatility, with the U.K. on Thursday seeing its electricity price jump 10-fold during one seven-hour period, to a record high of £2,300 ($3,180) per megawatt-hour (MWh), as Ireland, which regularly exports wind energy to the U.K., itself faced supply shortages.
They're not alone.
This volatility has brought higher prices, hitting record highs across Spain, Germany, and France. Residential users, meanwhile, bear the brunt of the cost.
The eye-watering bills come as both the European Union and United Kingdom push to become global leaders in decarbonizing their energy grids. Last year, for example, the EU pledged it would achieve net zero by 2050, a commitment that means phasing out carbon-intensive energy sources over the next decade for more sustainable sources like wind and solar. Complicating matters: Energy prices have soared this year as demand everywhere picks up, leaving homeowners in the middle of the push and pull of an increasingly volatile global market.
Customers in both Spain and Portugal are now paying an average of €140 ($165) for a MWh of electricity, according to Iberian Peninsula electricity market operator OMIE—the highest since 2002. And on Thursday, Spain’s day-ahead electricity was at a record €152.32/MWh. Over in France and the U.K., EDF Energy said it would raise its standard variable tariffs by 12% from Oct. 1 to account for rising wholesale energy costs. And France’s benchmark power price for delivery next year also hit a record high, at €99.50 per MWh.
Such record gas prices are not usually seen in the months before winter, when more power is needed to heat homes. ...
Years in the making
The current power crunch is the product of years of policy choices, many made with the best of intentions, and has left Europe in a sticky political situation.
For the past several years, Europe has been shutting down its own gas fields domestically to reduce impact on the environment. The largest gas field in Europe, the Dutch Groningen field, is currently being decommissioned eight years earlier than initially planned, with its output reduced to a “minimum” flow that is meant to be used only as a backup energy source. Similarly, gas production in the U.K. is down 28% year to date, according to global natural resources consultancy Wood Mackenzie, with Norwegian gas production also stilted due to maintenance....
Net zero’s net effect
The last lever pushing prices higher has been a knock-on effect of Europe’s efforts to bring down its emissions.
Renewable energy produced by wind and solar, which produces 20% of the electricity in Europe, is intermittent, which means it does not produce power when the sun doesn’t shine and the wind doesn’t blow. And without batteries, storage is limited.
This summer was a bad season for wind, with output in the U.K. dropping to as low as 409MW on Monday, compared to a record high of 17,600MW set on May 4. Things were equally grim in Germany, with renewable energy output at one point making 8.1 percent less in the country's total energy makeup.
And another self-inflicted cost is borne from the record high price that comes along with releasing carbon dioxide into European air under the EU's emissions trading scheme. Normally when gas prices increase, there “tends to be a switch from gas to coal power generation,” says Diaz, but given the tax under the emissions scheme, “there will be less switching that we can expect.”
6) WATCH: John Constable's evidence to the House of Lords inquiry into the cost of Net Zero
GWPF, 14 September 2021
Dr John Constable, the GWPF's energy editor, appeared before the House of Lords Industry and Regulators Committee this morning, which is currently holding an inquiry into the costs of Net Zero, the Government’s plans for total decarbonisation of the economy and the role of Ofgem, the energy regulator.
You can watch his full evidence and Q&A here
They're not alone.
This volatility has brought higher prices, hitting record highs across Spain, Germany, and France. Residential users, meanwhile, bear the brunt of the cost.
The eye-watering bills come as both the European Union and United Kingdom push to become global leaders in decarbonizing their energy grids. Last year, for example, the EU pledged it would achieve net zero by 2050, a commitment that means phasing out carbon-intensive energy sources over the next decade for more sustainable sources like wind and solar. Complicating matters: Energy prices have soared this year as demand everywhere picks up, leaving homeowners in the middle of the push and pull of an increasingly volatile global market.
Customers in both Spain and Portugal are now paying an average of €140 ($165) for a MWh of electricity, according to Iberian Peninsula electricity market operator OMIE—the highest since 2002. And on Thursday, Spain’s day-ahead electricity was at a record €152.32/MWh. Over in France and the U.K., EDF Energy said it would raise its standard variable tariffs by 12% from Oct. 1 to account for rising wholesale energy costs. And France’s benchmark power price for delivery next year also hit a record high, at €99.50 per MWh.
Such record gas prices are not usually seen in the months before winter, when more power is needed to heat homes. ...
Years in the making
The current power crunch is the product of years of policy choices, many made with the best of intentions, and has left Europe in a sticky political situation.
For the past several years, Europe has been shutting down its own gas fields domestically to reduce impact on the environment. The largest gas field in Europe, the Dutch Groningen field, is currently being decommissioned eight years earlier than initially planned, with its output reduced to a “minimum” flow that is meant to be used only as a backup energy source. Similarly, gas production in the U.K. is down 28% year to date, according to global natural resources consultancy Wood Mackenzie, with Norwegian gas production also stilted due to maintenance....
Net zero’s net effect
The last lever pushing prices higher has been a knock-on effect of Europe’s efforts to bring down its emissions.
Renewable energy produced by wind and solar, which produces 20% of the electricity in Europe, is intermittent, which means it does not produce power when the sun doesn’t shine and the wind doesn’t blow. And without batteries, storage is limited.
This summer was a bad season for wind, with output in the U.K. dropping to as low as 409MW on Monday, compared to a record high of 17,600MW set on May 4. Things were equally grim in Germany, with renewable energy output at one point making 8.1 percent less in the country's total energy makeup.
And another self-inflicted cost is borne from the record high price that comes along with releasing carbon dioxide into European air under the EU's emissions trading scheme. Normally when gas prices increase, there “tends to be a switch from gas to coal power generation,” says Diaz, but given the tax under the emissions scheme, “there will be less switching that we can expect.”
4) UK electricity prices now most expensive in Europe
S&P Global, 14 September 2021
UK day-ahead base price assessment triples. Gas dependence exposed by low wind, coal closures
UK day-ahead power prices tripled to record levels Sept. 13 as tight generation margins combined with soaring power import, natural gas and carbon prices. The UK's accelerated coal phase-out along with reduced nuclear availability and low wind generation have exposed the market to rising gas prices. The following is a breakdown of the major issues being tracked by S&P Global Platts.
Full details
S&P Global, 14 September 2021
UK day-ahead base price assessment triples. Gas dependence exposed by low wind, coal closures
UK day-ahead power prices tripled to record levels Sept. 13 as tight generation margins combined with soaring power import, natural gas and carbon prices. The UK's accelerated coal phase-out along with reduced nuclear availability and low wind generation have exposed the market to rising gas prices. The following is a breakdown of the major issues being tracked by S&P Global Platts.
Full details
5) UK factories may have to switch to diesel generators as energy prices rocket
The Daily Telegraph, 14 September 2021
Energy prices have surged to 11 times above normal levels – a fresh record high – as a crunch in gas supply, low wind speeds and power station closures pile unprecedented pressure on Britain’s grid.
The wholesale day-ahead power price in Britain rocketed to £540 per megawatt hour on Monday – £369 higher than Friday’s price, and more than 1,000pc above the average over the past decade. Gas reached an all-time high of 151p per therm, compared to around 40p per therm a year ago.
Experts warned that heavy energy users such as factories and steel mills might have to switch to diesel generators to cut their exposure to power prices, while households must also brace for a further increase to their energy bills in coming months.
Adam Lewis, partner at energy trading company Hartree Solutions, said some respite may come on Friday, when wind generation is forecast to pick up from about 1.5GW to 8GW, but added that forecasts are notoriously inaccurate.
The crisis in global energy supplies is harming countries across Europe. Ireland’s single electricity market will block power exports to Britain via the undersea Moyle Interconnector cable for the second time in less than a week on Tuesday to preserve the island’s power supplies.
Joe Camish, an analyst at Cornwall Insight, said prices have been climbing for months but have now far exceeded what would be expected even during a typical winter, with both gas and power reaching fresh all-time highs.
He said: “Looking ahead, there do not seem to be too many factors that are likely to push down these prices.”
Gas is in short supply globally due to production constraints and rising demand as countries emerge from lockdown. The gas price affects British electricity costs as more than 30pc is generated in gas-fired plants.
Some nuclear plants are also currently offline; some gas-fired plants have shut down; a power cable connecting Britain to France is temporarily running at reduced capacity; and the calm weather has slashed wind-power generation. Just 8pc of UK power came from wind last week, compared to 20pc across an average year.
National Grid ESO, which balances supply and demand in Britain, is required to make sure it always has spare power capacity – known as margin – to cope with any unplanned outages. Analysts expect margins to be relatively tight this week, potentially adding to pressure on prices as generators hold out for a higher price.
Mr Lewis said: “How can we increase that margin? It can’t come from interconnectors [power cables to the Continent] as they are scheduled to maximum. We can’t magic generation from anywhere. “The only thing is if we can loosen demand. That is possible – businesses and factories that have their own on-site generation are able to turn that on to reduce demand on the grid.
“Typically they would only do that in a winter period but at these prices I would expect they should be doing so, but it would depend on their route-to-market provider.”
The immediate impact of the price rises will fall on businesses rather than households, many of which are protected by a price cap on their bills.
This is set every six months by Ofgem, the energy regulator, based on average wholesale prices.
This current market turmoil will be reflected when the price cap is reset in April. Consumers face the prospect of a very significant rise unless wholesale costs fall dramatically in coming months.
Full story
The Daily Telegraph, 14 September 2021
Energy prices have surged to 11 times above normal levels – a fresh record high – as a crunch in gas supply, low wind speeds and power station closures pile unprecedented pressure on Britain’s grid.
The wholesale day-ahead power price in Britain rocketed to £540 per megawatt hour on Monday – £369 higher than Friday’s price, and more than 1,000pc above the average over the past decade. Gas reached an all-time high of 151p per therm, compared to around 40p per therm a year ago.
Experts warned that heavy energy users such as factories and steel mills might have to switch to diesel generators to cut their exposure to power prices, while households must also brace for a further increase to their energy bills in coming months.
Adam Lewis, partner at energy trading company Hartree Solutions, said some respite may come on Friday, when wind generation is forecast to pick up from about 1.5GW to 8GW, but added that forecasts are notoriously inaccurate.
The crisis in global energy supplies is harming countries across Europe. Ireland’s single electricity market will block power exports to Britain via the undersea Moyle Interconnector cable for the second time in less than a week on Tuesday to preserve the island’s power supplies.
Joe Camish, an analyst at Cornwall Insight, said prices have been climbing for months but have now far exceeded what would be expected even during a typical winter, with both gas and power reaching fresh all-time highs.
He said: “Looking ahead, there do not seem to be too many factors that are likely to push down these prices.”
Gas is in short supply globally due to production constraints and rising demand as countries emerge from lockdown. The gas price affects British electricity costs as more than 30pc is generated in gas-fired plants.
Some nuclear plants are also currently offline; some gas-fired plants have shut down; a power cable connecting Britain to France is temporarily running at reduced capacity; and the calm weather has slashed wind-power generation. Just 8pc of UK power came from wind last week, compared to 20pc across an average year.
National Grid ESO, which balances supply and demand in Britain, is required to make sure it always has spare power capacity – known as margin – to cope with any unplanned outages. Analysts expect margins to be relatively tight this week, potentially adding to pressure on prices as generators hold out for a higher price.
Mr Lewis said: “How can we increase that margin? It can’t come from interconnectors [power cables to the Continent] as they are scheduled to maximum. We can’t magic generation from anywhere. “The only thing is if we can loosen demand. That is possible – businesses and factories that have their own on-site generation are able to turn that on to reduce demand on the grid.
“Typically they would only do that in a winter period but at these prices I would expect they should be doing so, but it would depend on their route-to-market provider.”
The immediate impact of the price rises will fall on businesses rather than households, many of which are protected by a price cap on their bills.
This is set every six months by Ofgem, the energy regulator, based on average wholesale prices.
This current market turmoil will be reflected when the price cap is reset in April. Consumers face the prospect of a very significant rise unless wholesale costs fall dramatically in coming months.
Full story
6) WATCH: John Constable's evidence to the House of Lords inquiry into the cost of Net Zero
GWPF, 14 September 2021
Dr John Constable, the GWPF's energy editor, appeared before the House of Lords Industry and Regulators Committee this morning, which is currently holding an inquiry into the costs of Net Zero, the Government’s plans for total decarbonisation of the economy and the role of Ofgem, the energy regulator.
You can watch his full evidence and Q&A here
7) And finally: In 'Green' Germany coal is primary electricity source again
Deutsche Welle, 14 September 2021
In the first half of 2021, coal shot up as the biggest contributor to Germany's electric grid, while wind power dropped to its lowest level since 2018. Officials say the weather is partly to blame.
Although Germany is looking to boost renewable energies, coal unseated wind power as the country's main electricity source this year
Despite efforts to boost renewable energy sources, coal unseated wind power as the biggest energy contributor to the German network in the first six months of 2021, according to official statistics released on Monday.
The data comes as Germany looks to speed up its exit from coal-powered plants after years of mounting pressure from climate experts and activists over the country's dependence on coal and its detrimental impact in fueling the climate crisis.
But the latest figures also reveal the challenges that lie ahead with the country's energy shift.
Full story
Deutsche Welle, 14 September 2021
In the first half of 2021, coal shot up as the biggest contributor to Germany's electric grid, while wind power dropped to its lowest level since 2018. Officials say the weather is partly to blame.
Although Germany is looking to boost renewable energies, coal unseated wind power as the country's main electricity source this year
Despite efforts to boost renewable energy sources, coal unseated wind power as the biggest energy contributor to the German network in the first six months of 2021, according to official statistics released on Monday.
The data comes as Germany looks to speed up its exit from coal-powered plants after years of mounting pressure from climate experts and activists over the country's dependence on coal and its detrimental impact in fueling the climate crisis.
But the latest figures also reveal the challenges that lie ahead with the country's energy shift.
Full story
The London-based Global Warming Policy Forum is a world leading think tank on global warming policy issues. The GWPF newsletter is prepared by Director Dr Benny Peiser - for more information, please visit the website at www.thegwpf.com.
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