Everywhere in Europe, it is unheard of. For several weeks, electricity prices have reached record levels in the various European countries. An increase favored and maintained by the war in Ukraine that has invaded the economic terrain with reductions or even suspensions of Russian gas shipments to the West.
If everyone is subject to this substantial inflation, European countries are exposed to different degrees to this increase in electricity prices. In the same way, the measures adopted by the public authorities to deal with the phenomenon also differ from one neighbor to another. BFM Business reviews the multiple situations in Europe.
A 2% reduction in consumption in Germany
In Germany, the price of electricity on the wholesale market reached 850 euros per megawatt hour for the one-year contract, which represents a weekly increase of 40%. The German government adopted this Wednesday regulations to reduce electricity consumption by 2% and also gas in administrations, homes and companies. Among them, a heating in the office below 20 degrees, the closing of the doors of closed shops and the extinction of public lights at night.
On the side of its Austrian neighbor, the city of Vienna announced two weeks ago that it was giving up the lighting of its main avenue during the year-end celebrations. Also, the Christmas market in the capital will not light up until nightfall, an hour later than normal. This local move came days after the Austrian Energy Agency announced a 256% increase in wholesale electricity prices in one year.
Spain and Portugal relatively safe
Along with the Netherlands, the two German-speaking countries are among the first European countries to announce, in mid-June, increased use of coal to reduce their dependence on Russian gas. The Dutch state recently decided to reduce VAT on electricity from 21% to 9% and grant consumption-based tax reductions to around eight million households.
For their part, the Czech Republic, Italy, Spain, Hungary and Greece have joined the list, but with great disparities. In Italy, the price of electricity on the wholesale market also exceeds the bar of 700 euros per megawatt hour. To curb the magnitude of the price rise, the country plans to prohibit companies from modifying electricity supply contracts. In Belgium, the media is now concerned about the possible increase in household bills this winter.
A situation that seems very far from that observed in the Iberian Peninsula where the price of electricity is… just over 200 euros per megawatt hour. In fact, Spain and Portugal have been authorized by the European Union to limit the price that electricity producers pay for the purchase of gas.
The Baltic countries in difficulty, the Nordic countries proactive
Earlier this month, Latvia joined the group of countries to which Gazprom suspended gas deliveries, which also includes Poland, Bulgaria, Finland, Denmark and the Netherlands. To offset rising prices, Poland plans to cut energy taxes and provide subsidies to households. Dependent on Russian gas, the Baltic countries are particularly affected by the situation. This is the case of Lithuania, which failed to obtain from the European Union the indexation of the price of the electricity market on inflation that exceeds 20%.
Although the price of electricity per megawatt hour there is lower than in Western Europe, the Nordic countries are also taking steps to deal with it. Therefore, Norway bears household bills up to 80% when they exceed a certain rate. Meanwhile, the Swedish government has announced a €6 billion endowment for businesses and households.
France preserved… temporarily?
Across the Channel, the British energy regulator announced on Friday an 80% increase in electricity prices in a country where households and businesses are largely exposed to this increase. In neighboring Ireland, the Environment Minister, Eamon Ryan, spoke on Wednesday of a possible increase in electricity prices during peak hours this winter in a logic of fighting excessive consumption.
This categorical measure is reminiscent of what the Swiss authorities are thinking of: cutting off the electricity supply for 4 hours, several times a day next winter. Nearly two-thirds of the country’s electricity comes from imports from France, whose output is falling sharply.
Precisely in France, the maintenance of the “tariff shield” makes it possible to limit the increase in the electricity bill to 4% compared to 45% without this device. Before the war in Ukraine, this tool should give way to more specific measures aimed at the most modest households. A transition that could prove insufficient with respect to wholesale electricity prices that already reach 1,000 euros per megawatt hour for next year.
Source: BFM TV
