Europe’s green energy policies, designed to rapidly move the continent away from its dependence on fossil fuels, are contributing to the high price of electricity in the region.
The European benchmark index, which measures future electricity prices, hit a record high per megawatt hour (MWh) on Monday, days after prices in France and Germany surged 25%, according to data from the European Energy Exchange compiled by Bloomberg. It climbed to $993. By comparison, the average US electricity price hit $129 per MWh in June, according to federal data.
The energy crisis is forcing consumers across the continent to reduce electricity consumption, industrial production and energy rationing. The European Union Council (EU) has scheduled an emergency meeting of his EU energy ministers for next week in response to market conditions.
European Commission President Ursula von der Leyen said in a speech on Monday: “High electricity prices expose the limitations of current electricity market design for a variety of reasons. “A completely different situation, a completely different purpose. It was developed for and is no longer fit for purpose.”
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Von der Leyen blamed Russia’s aggression on Ukraine, which upended global energy markets, for triggering record price hikes, but the crisis is proof that the bloc needs a further transition to green energy. Russia has curbed natural gas supplies to Europe in response to the EU sanctions package introduced after the February invasion.
But European electricity prices hit an all-time high just months before the invasion.
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A Reuters analysis published in December found that lower-than-expected wind power was a major factor driving up prices and forcing suppliers to return to coal and natural gas.At the time of the invasion, Russia was Europe’s natural It was the largest importer of gas and coal.
“The word that comes to mind is nihilism,” Michael Shellenberger, an energy expert and founder of the group Environmental Progress, told FOX Business in an interview.
“There are people who are openly demanding that we do more of the same things that actually made the crisis possible,” he continued. “That’s what you’re seeing. Let’s do energy that doesn’t exist.” This is a symptom of a deranged individual who continues to engage in irrational activities that are clearly self-destructive, and that behavior is seen on a large scale. “
Shellenberger added that Europe should be “a warning to the United States that it should not go their way.”
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Over the last few years, EU policymakers have aggressively pushed for the retirement of conventional fossil fuel power plants and the massive expansion of green energy alternatives, including wind and solar. The EU unveiled the so-called European Green Deal last year, outlining plans for the continent to slash carbon emissions by increasing investment in renewable energy and limiting purchases of petrol cars.
In Germany, the EU’s largest economy, wind power alone accounted for the largest share of electricity generation from 2019 to 2021.
However, due to its intermittent nature, its high reliance on wind power leaves the country vulnerable if wind power output is lower than expected.
“Europe is underinvested in fossil fuels,” Fabian Ronningen, a senior electricity market analyst at Norwegian research firm Rystad Energy, told Fox Business in an interview. “All these coal-fired power plants are closed.”
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“If you have a system that makes heavy use of solar and wind power, you need some sort of backup for your system,” he continued. “Until we find a better technical solution than natural gas, we need something to back it up, and that is the current role of coal and gas and nuclear power in Europe.”
According to the Energy Information Administration, wind turbines generate between 25% and 50% of their stated capacity. Solar panels produce 10-35% of their capacity.
Winter, when demand for natural gas peaks, could be even more painful for Europeans, depending on Russia’s actions, according to an analysis released Thursday by research firm Wood Mackenzie. High prices are expected to depress demand for natural gas, with total EU gas inventories dropping to just 26 by the end of winter if Russia continues to halt flow through the main Nordstream 1 pipeline. % can be reduced.
“Uncertainty about gas supplies from Russia, coupled with tighter power markets due to weaker nuclear, hydro and wind power generation, and the risk of power outages are adding further stress to gas price futures this winter. said European gas analyst Penny Leake. Wood Mackenzie said in a statement shared with FOX Business.
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Leak added that if normal weather conditions occur, natural gas prices are expected to fall by more than 35% following the winter, close to prices recorded late last month.
Ronningen said he did not expect large-scale power distribution or uncontrolled blackouts during the winter, but said the costs to consumers would still be high.
“One thing that’s very clear when you look at winter is that it’s very expensive,” he said.