Heavy winter… with multiple electricity price hikes into the first quarter of 2022
The government is deeply concerned about the new year and the policy of horizontal subsidization of electricity bills
New increases in electricity bills for the first quarter of 2022 show the frantic rally of European gas prices.
January TTF contracts reached the Dutch hub trading even above 174 euros / MWh, while for February and March the prices are at 169.12 and 155.55 euros / MWh, respectively. A mini de-escalation at the level of 107 euros appears for April but even this forecast is uncertain.
According to market participants, as long as there is no way out of the EU crisis. with Russia and as long as Gazprom keeps the pipelines to the Member States half-open, “cheap gas energy will be a thing of the past.”
According to the same experienced executives, energy prices will never return to the levels of the period before the outbreak of the Covid-19 pandemic and much more in the era of lockdowns.
According to market sources, Europe’s dependence on fossil fuels is the only way for the Old Continent to become independent in the long run from the interests of major gas and oil producers. And the solution is, as they repeat at every opportunity, RES and energy storage.
The snowstorm… caused by the rally for rising gas prices and dependence on fossil fuels is sweeping both the domestic energy market and the economy.
For today, the transactions in the wholesale electricity market broke every record. The average price is 415.94 euros / MWh and in four days has more than doubled. On December 18 the price was 197.98 euros / MWh.
Energy market executives estimate that price fluctuations will continue until the end of the year and at least the first three months of 2022. The crisis will certainly last for six months, conclude the forecasts of energy companies.
Estimates for December, until the speech of the Prime Minister last Saturday in Parliament, showed an average price of the wholesale electricity market at around 270 euros / MWh. Based on these, the announcements were made for the increase of the subsidy of the accounts from 130 to 165 euros / MWh. It is uncertain whether this amount of aid will relieve households and professionals of December consumption.
The government is deeply concerned about the new year and the policy of horizontal subsidization of electricity bills. Resources may also be concentrated due to the increase in emission allowances of pollutants that bring revenue from their auction tenders, but the permanent aid is not in line with the principles of a sound energy policy. In essence, according to analysts, the subsidy is essentially directed at fossil fuels and not at the development of cheap and clean energy.
On the other hand, the political cost will be huge in the event of a horizontal subsidy cut in the midst of rising electricity and gas prices.
Middle-income households as well as businesses that provide jobs and grow, are at risk, as noted by market participants, of being on the brink of energy poverty and suspending their activities, respectively.