Energy crisis: Lights go off in Europe as prices soar • FRANCE 24 English

[beijingwalker]

Energy crisis: Lights go off in Europe as prices soar • FRANCE 24 English​

Sep 21, 2022

 

[PakAlp]

The people have no choice but to switch heating off this winter. Working class make £1200 a month and if Gas/Electricity bill comes to £1000 then they will be devastated.

Almost one in four UK adults will not turn heating on at all this winter

Findings of survey conducted before announcement of 80% hike in price cap described as ‘national scandal’

www.theguardian.com

 

[beijingwalker]

How much energy can be saved by turning off the lights?

The people have no choice but to switch heating off this winter. Working class make £1200 a month and if Gas/Electricity bill comes to £1000 then they will be devastated.

Almost one in four UK adults will not turn heating on at all this winter

Findings of survey conducted before announcement of 80% hike in price cap described as ‘national scandal’

www.theguardian.com

I never heard energy bill can be more than your house rent, this is insane and it's just a start.

 

[NaqsheYaar]

Things are going to get worse as we draw close to the harsh winters..

 

[beijingwalker]

Energy crisis: Europe’s industry shutting down​

Sky-high gas and power prices have made many of Europe's most energy-intensive industries loss-making, so they are simply being shut down. / bne IntelliNews
15

By Ben Aris in Berlin September 20, 2022

With energy prices at decade-long highs, Europe’s most energy-intensive companies have begun to shut down. Dozens of plants across a diverse range of industries such as steel, aluminium, fertilisers and the power industry itself have been forced to close up shop as sky-high gas and power prices make their businesses lossmaking.

The shortage of gas has already prompted talk of energy rationing crippling industry, but for the most energy-intensive sectors things have already gone beyond that; costs have risen so high they are no longer profitable and have to close down.

That gutting of Europe’s heavy industry is already weighing on the economies of the region and economists are predicting that the EU is about to go into a deep recession.
“Sky-high gas prices and aggressive monetary policy tightening have pushed the global economy to the brink of a late 2022/early 2023 recession – defined as two quarters of falling per capita GDP. We expect a global recession to be avoided, but a sustained and substantial improvement in growth also seems unlikely,” Oxford Economics said in a note.

The closures could do long-term damage to Europe’s industrial base. In Germany, Europe’s industrial powerhouse, the most energy-intensive industries are already being hit hard by unsustainable costs: energy accounts for 26% of the metallurgy industry costs; 19% of basic chemical production; 18% of glass manufacture; 17% for paper; and 15% of construction materials, according to Destatis. European carmakers have already begun hoarding windscreens in anticipation of a glass shortage in the months to come.

Over half of Europe’s aluminium smelters have already been affected by the power crises. The EU has temporarily lost 650,000 tonnes of primary aluminium capacity, or about 30% of its total, Eurometaux said. Some of Europe’s biggest steel and chemical plants have also been taken offline and there is no clear idea of when they can start up again. And Europe's fertiliser industry association says more than 70% of the continent's fertiliser production has been either shut or slowed due to sky-high gas prices.

As bne IntelliNews reported, after over seven months of war, commodity prices across the board have begun to fall in the last few weeks, but even as they come off their panic peaks the prices of things like gas and power remain double or treble their normal levels.

Steel
Producers of the metal from Spain to Germany are beginning to slow down or entirely stop their output as the higher costs make production unsustainable, even with steel trading near record levels. So far, more than 3mn tonnes of annual capacity are already being affected by sharply rising costs, reports Steel News.

At the start of September India’s ArcelorMittal, one of the largest steelmakers in the world, said it was planning to close two of its plants in Germany amid soaring electricity costs.

Construction steel is typically made in power-intensive electric furnaces that have been hit hard by the record power prices in Europe.

Many mills using electric-arc furnaces are now loss-making. Plants using coal-fired blast furnaces will be less badly affected, say experts, as power makes up a lower proportion of their costs.

Other big steel mills in the firing line are Acerinox SA, Salzgitter AG and Liberty Steel. Spain’s Acerinox has already partially closed one plant in Cadiz, where a stainless steel mill has halted but other hot and cold rolling lines are still working. The company has also furloughed 1,800 workers, 85% of its work force.

In Germany, Salzgitter reduced its melting operations at its Peine plant and UK producer Liberty Steel stopped production at its Rotherham mill earlier than expected, reported Bloomberg.

Spanish Celsa Group’s furnaces at its Barcelona plant were halted last month, while Megasa SA also idled two facilities in the northern region of Galicia, according to Bloomberg. ArcelorMittal has closed its Spanish plan at Sestao, which will not resume working as previously planned on March 13 due to high electricity costs.
Already at the beginning of August, the Belgian Aperam mill in Genk was closed and production at the Châtelet mill has been reduced.

The Spanish and Belgian EAF mills alone have a combined production capacity of more than 3mn tonnes per year (tpy) of stainless steel, which will definitely have an impact on the availability of stainless steel in Europe. In addition, there are about 2.5mn tpy of further EAF stainless capacities in Northern and Southern Europe about which no further information is currently available.

Aluminium
European producers of aluminium and other non-ferrous metals have cut production in response to soaring energy prices.
Since September 2021, the European Union has temporarily lost almost one-third of its primary aluminium capacity, and there have been similar shutdowns and capacity reductions by producers of zinc and other metals that require large amounts of electricity. Electricity costs make up to 40% of the production costs for primary non-ferrous metals, according to Eurometaux, the European Association of Metals.

They include a number of producers in eastern EU members such as Romania’s Alro, Slovakia’s Slovalco and Talum in Slovenia, as well as KAP in EU accession candidate Montenegro.

In Romania, Alro announced to investors in a note filed to the Bucharest Stock Exchange (BVB) at the end of December that its board of directors had decided that the production of primary aluminium would be reduced in 2022 from five to two electrolysis halls, “in the context of the exceptional situation on the energy and gas markets”.
Slovakia’s Slovalco cut production by 40%, after previously announcing a capacity cut to 80% in 2019, the latter connected to the country’s EU Emissions Trading System (ETS). The new cut corresponds to a reduction of 35,000 tpy of aluminium.

“If conditions are not improved, the smelter, which is one of the newest and most efficient in Europe, will shut down permanently," the association said.
Meanwhile, Talum lowered production from its Slovenian smelter from November 1.

Among the West European companies to take similar steps are Aluminium Dunkerque Industries France, Trimet Aluminium in Germany, Aldel in the Netherlands and Alcoa in Italy.

The hike in power costs has also affected European producers outside the EU.
Montenegro’s Uniprom completed the shutdown of the country’s sole aluminium smelter, KAP, on December 30, after it failed to reach an agreement on a new electricity price with power company EPCG and the rising electricity prices made its production uneconomic.

That left Monetengro’s power company EPCG with excess electricity worth more than €100mn to export after its biggest client halted operations.
Eurometaux said there have been a number of shutdowns and reductions in production at zinc producers, as all nine electrolytic zinc smelters in the EU have been “heavily affected” by the power crisis. Among them is the KCM zinc smelter in Bulgaria.

Fertilisers
Fertiliser producers are also shutting down as they are on the front line of the economic war, heavily dependent on gas as a feedstock. That could cause some serious problems.

The world will face a food shortage if the fertiliser markets are not normalised, the head of the UN said on September 15. "If we don't normalise the fertiliser markets, we will have a problem of food in 2023," UN Secretary-General Antonio Guterres stressed during the 77th UN General Assembly. "We are doing everything to make it happen in reality to get Russian food and fertilisers to global markets," Guterres added.

The German chemicals powerhouse BASF has already temporarily shuttered 80 plans worldwide and is slowing production at another 100 as it plans further output cuts depending on what happens to gas prices.

BASF is one of the largest gas users in German and said last week it is bracing for prolonged high gas prices that it uses as a feedstock for chemical production.
"BASF is monitoring the situation and will decide, depending on the situation, on any changes to the production value chain as appropriate," it said in a statement as cited by Reuters.

Rival ammonia makers Yara and CF Industries said last month they were also slashing ammonia production in Europe due to soaring gas prices.
The EU’s fifth sanction package limited imports of Russian fertilisers, throwing Europe onto its own resources. At the same time as Europe has cut off imports from its biggest supplier, it has been unable to step up its own production as the exploding cost of gas is driving EU fertiliser plants out of business.

One of Europe's biggest fertiliser producers, Warsaw-listed Polish chemicals group Azoty and its listed unit Pulawy, has suspended or reduced production of some products, including nitrogen fertilisers and ammonia, due to skyrocketing prices of gas, the companies said on August 23.

“Due to record prices for natural gas, the main production feedstock used by Grupa Azoty … the company decided that as of August 23, it will temporarily shut down its nitrogen fertiliser, caprolactam and polyamide 6 production units,” the company said in a market filing. Pulawy said that it would cut its ammonia output to “about 10%” of production capacity.

“Although there are no problems with the availability of gas, the current situation in the gas market, which determines the profitability of production activities, is extraordinary and completely beyond the control of [the group], and could not have been predicted,” the two companies said in similarly-worded statements.

Another Polish fertiliser maker, Anwil – which is owned by energy giant PKN Orlen – also said on August 23 that it would suspend production of nitrogen fertilisers due to high prices of gas.

In Romania, the operations of fertiliser producer Azomures have been disrupted since December 2021 by high gas prices. Azomures produces 50% of the fertilisers used by Romanian farmers and is the largest natural gas consumer in the country accounting for 10% of total consumption.

The company resumed production of fertilisers and other industrial products in April with state support, but two months later discontinued the production of ammonia, saying at the time that it would only keep producing fertilisers until it used up all its inventory of ammonia. That point arrived in September, when Azomures decided to reduce its activity. Around 200 of its 1,000 employees will now be either sent home under a technical unemployment scheme or re-allocated to other companies.

Power
The wild swings in gas prices have fed through to the normally placid power market, which has wreaked havoc. The power sector relies on exactly matching demand and supply, and traders are the backbone of this mechanism. If supply and demand can’t be balanced then power stations simply go offline.

While the power system is efficiently co-ordinated Europe-wide, trading in power remains a largely local business with many small traders playing a key role. The wild swings in prices make their business impossible and open up these traders to large losses if they get caught on the wrong side of a trade.

Since September 2021, nearly 30 UK energy suppliers have filed for bankruptcy. Bankruptcies elsewhere include Bohemia Energy, the largest alternative supplier to state-owned CEZ in Czechia, which filed for bankruptcy in October 2021, while multiple energy providers have said they will withdraw from the French market.

More pressure is being placed on small traders as contracts are usually signed well in advance to ensure the broker has power to sell when it is needed. Normal these contracts come with an upfront payment, but the central counterparties (CCPs) that facilitate these trades are now demanding up to 80% of the contract price ahead of time, creating a liquidity problem that small traders can’t cover and banks are increasingly unwilling to credit. The prospects of a default are growing and if a big trading house goes down that would lead to a system-wide liquidity crisis, says the Bruegel think-tank.

Several large utility players have already got into trouble. The German government is preparing to bail out its major utility company, Uniper, with a rescue package worth €15bn; the Élysée has announced a €10bn package to finalise the nationalisation of Electricité de France (EDF); and in early July CEZ, Czechia’s biggest utility, signed a credit agreement with the country’s finance ministry for up to €3bn, providing liquidity to the company.

European governments have been forced to step into the breach with massive bailout packages and nationalisations. Since September 2021, governmental interventions have spanned between 0.1 and 3.6% of GDP and amount to a total of around €230bn in the first half of this year. That number is set to as much as double before the end of this year.

Economic impact on Europe
The economic war with Russia is already weighing heavily on Europe’s economy. The two main business polls, ZEW and IFO, have both tanked in recent months as fears of a Europe-wide deep recession build and growth forecasts have repeatedly been downgraded.

“The ZEW index for the eurozone fell again in September, as the assessment of the current situation and the outlook for the next six months deteriorated further, which reaffirms our call for an incoming recession this winter. The picture is even worse in Germany, where the outlook has deteriorated even more significantly,” Oxford Economics said in a note. “The index for the eurozone now stands at -60.7, down 5.8 pp from August.”

Runaway inflation is dragging growth down as central banks across the region aggressively hike rates in an effort to regain control of prices. August inflation remained high in Germany and Spain, picking up to 7.9% year on year and 10.5% y/y respectively, driven up by food and energy hikes.

“Among the categories that drove the increase are housing (up 24.8% y/y), boosted by surging electricity prices, and food prices whose rate was 13.8%, the highest since the beginning of the series in January 1994,” Oxford Economic said.

Fiscal support to protect households and businesses from ballooning energy prices generally amounts to around 2-3% of GDP across Central and Eastern Europe (CEE) but is already in double digits in some countries. Economists are already saying the relief packages will cushion the blow, but they cannot stop a recession.
Governments have been rolling out a raft of measures to counter the crisis.

In Poland, the government slashed VAT and excise duties on fuel and energy at the start of this year, provided cash handouts to households, and has approved a price cap on heating for the upcoming winter. The total cost of this support amounts to around €11bn (1.7% of GDP), reports Capital Economics.

In Romania, the government has set caps on electricity and gas prices since last November and said it will continue to do so until August 2023. It has also introduced a series of grants, vouchers and subsidies for vulnerable households and industries.

The Czech government has been slower to respond but is now acting on a noticeable scale. Last month it approved an energy subsidy for households and businesses and said that it has set aside a total of €7bn (2.5% of GDP) to deal with soaring prices.

In Hungary the government abandoned its price cap on household utility prices last month that had been in place since 2014, as it was proving too costly. It is now charging higher prices for above-average consumption, although it still estimates that keeping price caps partially in place will cost around €5bn this year (3.0% of GDP). All told, governments are providing support to counter high energy prices which totals around 2-3% of GDP, Capital Economics said in a note.

“These fiscal interventions will provide support to economic activity, but they won’t completely mitigate the effect of extremely elevated prices. Based on calculations we published earlier this week, which assume a full pass-through of wholesale energy prices to consumer prices, household spending on energy would rise by more than 3% of GDP across most of the region between 2021 and 2023. That rise is more than the total offsetting fiscal support governments have announced for both households and businesses,” Nicholas Farr, the Emerging Europe economist for Capital Economics, said in a note.

More and more government are looking at capping energy prices. An attempt to impose a Europe-wide cap on gas prices already seems to have fallen at the first fence but plans at national level are proliferating. Last week the Polish government set out more plans to freeze electricity prices in 2023 up to certain consumption levels, while Czechia’s government said it intends to cap electricity and gas prices from November. Romania has introduced a tax on the sector to offset the cost of its price caps, and Czechia’s plan to cap utility prices is part-funded by a windfall tax on energy companies. EU member states will discuss a similar bloc-wide tax later in September.

“Even so, if energy prices surge further or stay high for a prolonged period, some governments may still find it difficult to maintain or increase support,” says Farr.
A deep recession seems inevitable now. Eurozone industrial production slipped into the black in July after three months of expansion with a 2.3% fall – far worse than consensus expectations of a 1% drop. Three of the big four economies posted monthly declines in a sign that the industrial outlook was deteriorating markedly as Europe's energy crisis is visibly taking its toll on industry.



“Further contractions in industrial output are to be expected as wholesale gas and electricity prices remain higher for longer, leading to demand destruction. Less government support for industry compared to households over winter will also weigh on output. We expect eurozone industry and GDP to enter a recession from Q3 and ending in Q1 next year,” Oxford Economics said in a note. “The GDP recession should be shallow, with activity gradually picking up over 2023 as inflation starts to ease and the ECB stops hiking. Nevertheless, the severe escalation in Europe's energy crisis means GDP growth will be flat next year.”

Energy crisis: Europe’s industry shutting down

With energy prices at decade-long highs, Europe’s most energy-intensive companies have begun to shut down. Dozens of plants across a diverse range ...

www.intellinews.com

 

[PakFactor]

Could not care any less; let them freeze.

 

[beijingwalker]

Putin’s Energy War Is Crushing Europe​

The big question is whether it ends up undermining support for Ukraine.​

By Christina Lu, a reporter at Foreign Policy.
SEPTEMBER 20, 2022, 4:28 PM

Putin’s Energy War Is Crushing Europe

The big question is whether it ends up undermining support for Ukraine.

foreignpolicy.com

 

[_NOBODY_]

Energy crisis: Europe’s industry shutting down​

Sky-high gas and power prices have made many of Europe's most energy-intensive industries loss-making, so they are simply being shut down. / bne IntelliNews
15

By Ben Aris in Berlin September 20, 2022

With energy prices at decade-long highs, Europe’s most energy-intensive companies have begun to shut down. Dozens of plants across a diverse range of industries such as steel, aluminium, fertilisers and the power industry itself have been forced to close up shop as sky-high gas and power prices make their businesses lossmaking.

The shortage of gas has already prompted talk of energy rationing crippling industry, but for the most energy-intensive sectors things have already gone beyond that; costs have risen so high they are no longer profitable and have to close down.

That gutting of Europe’s heavy industry is already weighing on the economies of the region and economists are predicting that the EU is about to go into a deep recession.
“Sky-high gas prices and aggressive monetary policy tightening have pushed the global economy to the brink of a late 2022/early 2023 recession – defined as two quarters of falling per capita GDP. We expect a global recession to be avoided, but a sustained and substantial improvement in growth also seems unlikely,” Oxford Economics said in a note.

The closures could do long-term damage to Europe’s industrial base. In Germany, Europe’s industrial powerhouse, the most energy-intensive industries are already being hit hard by unsustainable costs: energy accounts for 26% of the metallurgy industry costs; 19% of basic chemical production; 18% of glass manufacture; 17% for paper; and 15% of construction materials, according to Destatis. European carmakers have already begun hoarding windscreens in anticipation of a glass shortage in the months to come.

Over half of Europe’s aluminium smelters have already been affected by the power crises. The EU has temporarily lost 650,000 tonnes of primary aluminium capacity, or about 30% of its total, Eurometaux said. Some of Europe’s biggest steel and chemical plants have also been taken offline and there is no clear idea of when they can start up again. And Europe's fertiliser industry association says more than 70% of the continent's fertiliser production has been either shut or slowed due to sky-high gas prices.

As bne IntelliNews reported, after over seven months of war, commodity prices across the board have begun to fall in the last few weeks, but even as they come off their panic peaks the prices of things like gas and power remain double or treble their normal levels.

Steel
Producers of the metal from Spain to Germany are beginning to slow down or entirely stop their output as the higher costs make production unsustainable, even with steel trading near record levels. So far, more than 3mn tonnes of annual capacity are already being affected by sharply rising costs, reports Steel News.

At the start of September India’s ArcelorMittal, one of the largest steelmakers in the world, said it was planning to close two of its plants in Germany amid soaring electricity costs.

Construction steel is typically made in power-intensive electric furnaces that have been hit hard by the record power prices in Europe.

Many mills using electric-arc furnaces are now loss-making. Plants using coal-fired blast furnaces will be less badly affected, say experts, as power makes up a lower proportion of their costs.

Other big steel mills in the firing line are Acerinox SA, Salzgitter AG and Liberty Steel. Spain’s Acerinox has already partially closed one plant in Cadiz, where a stainless steel mill has halted but other hot and cold rolling lines are still working. The company has also furloughed 1,800 workers, 85% of its work force.

In Germany, Salzgitter reduced its melting operations at its Peine plant and UK producer Liberty Steel stopped production at its Rotherham mill earlier than expected, reported Bloomberg.

Spanish Celsa Group’s furnaces at its Barcelona plant were halted last month, while Megasa SA also idled two facilities in the northern region of Galicia, according to Bloomberg. ArcelorMittal has closed its Spanish plan at Sestao, which will not resume working as previously planned on March 13 due to high electricity costs.
Already at the beginning of August, the Belgian Aperam mill in Genk was closed and production at the Châtelet mill has been reduced.

The Spanish and Belgian EAF mills alone have a combined production capacity of more than 3mn tonnes per year (tpy) of stainless steel, which will definitely have an impact on the availability of stainless steel in Europe. In addition, there are about 2.5mn tpy of further EAF stainless capacities in Northern and Southern Europe about which no further information is currently available.

Aluminium
European producers of aluminium and other non-ferrous metals have cut production in response to soaring energy prices.
Since September 2021, the European Union has temporarily lost almost one-third of its primary aluminium capacity, and there have been similar shutdowns and capacity reductions by producers of zinc and other metals that require large amounts of electricity. Electricity costs make up to 40% of the production costs for primary non-ferrous metals, according to Eurometaux, the European Association of Metals.

They include a number of producers in eastern EU members such as Romania’s Alro, Slovakia’s Slovalco and Talum in Slovenia, as well as KAP in EU accession candidate Montenegro.

In Romania, Alro announced to investors in a note filed to the Bucharest Stock Exchange (BVB) at the end of December that its board of directors had decided that the production of primary aluminium would be reduced in 2022 from five to two electrolysis halls, “in the context of the exceptional situation on the energy and gas markets”.
Slovakia’s Slovalco cut production by 40%, after previously announcing a capacity cut to 80% in 2019, the latter connected to the country’s EU Emissions Trading System (ETS). The new cut corresponds to a reduction of 35,000 tpy of aluminium.

“If conditions are not improved, the smelter, which is one of the newest and most efficient in Europe, will shut down permanently," the association said.
Meanwhile, Talum lowered production from its Slovenian smelter from November 1.

Among the West European companies to take similar steps are Aluminium Dunkerque Industries France, Trimet Aluminium in Germany, Aldel in the Netherlands and Alcoa in Italy.

The hike in power costs has also affected European producers outside the EU.
Montenegro’s Uniprom completed the shutdown of the country’s sole aluminium smelter, KAP, on December 30, after it failed to reach an agreement on a new electricity price with power company EPCG and the rising electricity prices made its production uneconomic.

That left Monetengro’s power company EPCG with excess electricity worth more than €100mn to export after its biggest client halted operations.
Eurometaux said there have been a number of shutdowns and reductions in production at zinc producers, as all nine electrolytic zinc smelters in the EU have been “heavily affected” by the power crisis. Among them is the KCM zinc smelter in Bulgaria.

Fertilisers
Fertiliser producers are also shutting down as they are on the front line of the economic war, heavily dependent on gas as a feedstock. That could cause some serious problems.

The world will face a food shortage if the fertiliser markets are not normalised, the head of the UN said on September 15. "If we don't normalise the fertiliser markets, we will have a problem of food in 2023," UN Secretary-General Antonio Guterres stressed during the 77th UN General Assembly. "We are doing everything to make it happen in reality to get Russian food and fertilisers to global markets," Guterres added.

The German chemicals powerhouse BASF has already temporarily shuttered 80 plans worldwide and is slowing production at another 100 as it plans further output cuts depending on what happens to gas prices.

BASF is one of the largest gas users in German and said last week it is bracing for prolonged high gas prices that it uses as a feedstock for chemical production.
"BASF is monitoring the situation and will decide, depending on the situation, on any changes to the production value chain as appropriate," it said in a statement as cited by Reuters.

Rival ammonia makers Yara and CF Industries said last month they were also slashing ammonia production in Europe due to soaring gas prices.
The EU’s fifth sanction package limited imports of Russian fertilisers, throwing Europe onto its own resources. At the same time as Europe has cut off imports from its biggest supplier, it has been unable to step up its own production as the exploding cost of gas is driving EU fertiliser plants out of business.

One of Europe's biggest fertiliser producers, Warsaw-listed Polish chemicals group Azoty and its listed unit Pulawy, has suspended or reduced production of some products, including nitrogen fertilisers and ammonia, due to skyrocketing prices of gas, the companies said on August 23.

“Due to record prices for natural gas, the main production feedstock used by Grupa Azoty … the company decided that as of August 23, it will temporarily shut down its nitrogen fertiliser, caprolactam and polyamide 6 production units,” the company said in a market filing. Pulawy said that it would cut its ammonia output to “about 10%” of production capacity.

“Although there are no problems with the availability of gas, the current situation in the gas market, which determines the profitability of production activities, is extraordinary and completely beyond the control of [the group], and could not have been predicted,” the two companies said in similarly-worded statements.

Another Polish fertiliser maker, Anwil – which is owned by energy giant PKN Orlen – also said on August 23 that it would suspend production of nitrogen fertilisers due to high prices of gas.

In Romania, the operations of fertiliser producer Azomures have been disrupted since December 2021 by high gas prices. Azomures produces 50% of the fertilisers used by Romanian farmers and is the largest natural gas consumer in the country accounting for 10% of total consumption.

The company resumed production of fertilisers and other industrial products in April with state support, but two months later discontinued the production of ammonia, saying at the time that it would only keep producing fertilisers until it used up all its inventory of ammonia. That point arrived in September, when Azomures decided to reduce its activity. Around 200 of its 1,000 employees will now be either sent home under a technical unemployment scheme or re-allocated to other companies.

Power
The wild swings in gas prices have fed through to the normally placid power market, which has wreaked havoc. The power sector relies on exactly matching demand and supply, and traders are the backbone of this mechanism. If supply and demand can’t be balanced then power stations simply go offline.

While the power system is efficiently co-ordinated Europe-wide, trading in power remains a largely local business with many small traders playing a key role. The wild swings in prices make their business impossible and open up these traders to large losses if they get caught on the wrong side of a trade.

Since September 2021, nearly 30 UK energy suppliers have filed for bankruptcy. Bankruptcies elsewhere include Bohemia Energy, the largest alternative supplier to state-owned CEZ in Czechia, which filed for bankruptcy in October 2021, while multiple energy providers have said they will withdraw from the French market.

More pressure is being placed on small traders as contracts are usually signed well in advance to ensure the broker has power to sell when it is needed. Normal these contracts come with an upfront payment, but the central counterparties (CCPs) that facilitate these trades are now demanding up to 80% of the contract price ahead of time, creating a liquidity problem that small traders can’t cover and banks are increasingly unwilling to credit. The prospects of a default are growing and if a big trading house goes down that would lead to a system-wide liquidity crisis, says the Bruegel think-tank.

Several large utility players have already got into trouble. The German government is preparing to bail out its major utility company, Uniper, with a rescue package worth €15bn; the Élysée has announced a €10bn package to finalise the nationalisation of Electricité de France (EDF); and in early July CEZ, Czechia’s biggest utility, signed a credit agreement with the country’s finance ministry for up to €3bn, providing liquidity to the company.

European governments have been forced to step into the breach with massive bailout packages and nationalisations. Since September 2021, governmental interventions have spanned between 0.1 and 3.6% of GDP and amount to a total of around €230bn in the first half of this year. That number is set to as much as double before the end of this year.

Economic impact on Europe
The economic war with Russia is already weighing heavily on Europe’s economy. The two main business polls, ZEW and IFO, have both tanked in recent months as fears of a Europe-wide deep recession build and growth forecasts have repeatedly been downgraded.

“The ZEW index for the eurozone fell again in September, as the assessment of the current situation and the outlook for the next six months deteriorated further, which reaffirms our call for an incoming recession this winter. The picture is even worse in Germany, where the outlook has deteriorated even more significantly,” Oxford Economics said in a note. “The index for the eurozone now stands at -60.7, down 5.8 pp from August.”

Runaway inflation is dragging growth down as central banks across the region aggressively hike rates in an effort to regain control of prices. August inflation remained high in Germany and Spain, picking up to 7.9% year on year and 10.5% y/y respectively, driven up by food and energy hikes.

“Among the categories that drove the increase are housing (up 24.8% y/y), boosted by surging electricity prices, and food prices whose rate was 13.8%, the highest since the beginning of the series in January 1994,” Oxford Economic said.

Fiscal support to protect households and businesses from ballooning energy prices generally amounts to around 2-3% of GDP across Central and Eastern Europe (CEE) but is already in double digits in some countries. Economists are already saying the relief packages will cushion the blow, but they cannot stop a recession.
Governments have been rolling out a raft of measures to counter the crisis.

In Poland, the government slashed VAT and excise duties on fuel and energy at the start of this year, provided cash handouts to households, and has approved a price cap on heating for the upcoming winter. The total cost of this support amounts to around €11bn (1.7% of GDP), reports Capital Economics.

In Romania, the government has set caps on electricity and gas prices since last November and said it will continue to do so until August 2023. It has also introduced a series of grants, vouchers and subsidies for vulnerable households and industries.

The Czech government has been slower to respond but is now acting on a noticeable scale. Last month it approved an energy subsidy for households and businesses and said that it has set aside a total of €7bn (2.5% of GDP) to deal with soaring prices.

In Hungary the government abandoned its price cap on household utility prices last month that had been in place since 2014, as it was proving too costly. It is now charging higher prices for above-average consumption, although it still estimates that keeping price caps partially in place will cost around €5bn this year (3.0% of GDP). All told, governments are providing support to counter high energy prices which totals around 2-3% of GDP, Capital Economics said in a note.

“These fiscal interventions will provide support to economic activity, but they won’t completely mitigate the effect of extremely elevated prices. Based on calculations we published earlier this week, which assume a full pass-through of wholesale energy prices to consumer prices, household spending on energy would rise by more than 3% of GDP across most of the region between 2021 and 2023. That rise is more than the total offsetting fiscal support governments have announced for both households and businesses,” Nicholas Farr, the Emerging Europe economist for Capital Economics, said in a note.

More and more government are looking at capping energy prices. An attempt to impose a Europe-wide cap on gas prices already seems to have fallen at the first fence but plans at national level are proliferating. Last week the Polish government set out more plans to freeze electricity prices in 2023 up to certain consumption levels, while Czechia’s government said it intends to cap electricity and gas prices from November. Romania has introduced a tax on the sector to offset the cost of its price caps, and Czechia’s plan to cap utility prices is part-funded by a windfall tax on energy companies. EU member states will discuss a similar bloc-wide tax later in September.

“Even so, if energy prices surge further or stay high for a prolonged period, some governments may still find it difficult to maintain or increase support,” says Farr.
A deep recession seems inevitable now. Eurozone industrial production slipped into the black in July after three months of expansion with a 2.3% fall – far worse than consensus expectations of a 1% drop. Three of the big four economies posted monthly declines in a sign that the industrial outlook was deteriorating markedly as Europe's energy crisis is visibly taking its toll on industry.



“Further contractions in industrial output are to be expected as wholesale gas and electricity prices remain higher for longer, leading to demand destruction. Less government support for industry compared to households over winter will also weigh on output. We expect eurozone industry and GDP to enter a recession from Q3 and ending in Q1 next year,” Oxford Economics said in a note. “The GDP recession should be shallow, with activity gradually picking up over 2023 as inflation starts to ease and the ECB stops hiking. Nevertheless, the severe escalation in Europe's energy crisis means GDP growth will be flat next year.”

Energy crisis: Europe’s industry shutting down

With energy prices at decade-long highs, Europe’s most energy-intensive companies have begun to shut down. Dozens of plants across a diverse range ...

www.intellinews.com

Things will get worse when winter will come in all of its glory.

 

[casual]

Europe will lose its heavy industry if this keeps up.

 

[beijingwalker]

RIP

 

[Catalystic]

Say thanks to WEF for starting this shitshow, all part of depopulation agenda 2030. If this still doesn’t open your eyes, nothing will.

Europeans hav fallen into sweet honey trap of the usa

 

[beijingwalker]

Shorter showers, slower drives and an Eiffel Tower blackout: How Europe plans to cut gas usage this winter​

PUBLISHED WED, SEP 21 20221:47 AM EDTUPDATED WED, SEP 21 20225:16 AM EDT

KEY POINTS

• From cutting down on showering time to 5 minutes, fining shopkeepers for not closing their doors and driving slower, Europe is embarking on a goal to reduce gas use in time for winter.
• Some reports estimate that should Europe be able to cut their gas use by 15%, they would be able to cope with winter despite limited supplies and soaring energy prices.
• However, according to an analyst from Eurasia Group, that target may seem ambitious especially when the winter season starts.

From cutting down on shower time, driving slower and fining shopkeepers for not closing their doors, Europeans are embarking on a target of reducing energy usage in time for winter, and some citizens have taken to social media to share their experiences.
For example, German Christopher Hipp offered tips on Twitter on how to defrost a freezer, saying that more electricity is saved the more frost-free the kitchen device is.

Cindy, who lives in the Netherlands, shared her attempts at trying to shower within a 5 minute time target — failing with 6 minutes and 21 seconds. “It took 48 seconds for the shower to get hot,” she tweeted.

Ruud Vuik and his daughter, who also reside in the Netherlands, tried the same feat by using a blue water droplet-shaped shower timer for a week, which starts at 5 minutes before trickling away to a blaring alarm.

A customer browses alcoholic beverages inside a fridge at Exale Brewing and Taproom in East London on August 19, 2022. The European Commission in July has agreed on a voluntary target to cut gas use by 15% by 2023, compared to what the average consumption was from 2016 to 2021.
Hollie Adams | Afp | Getty Images


These targets are part of EU’s wider effort to cut natural gas demand this winter, with an arsenal of methods of their own choosing.
The European Commission, the executive arm of the EU, in July agreed on a voluntary target to cut gas use by 15% until March 2023, compared to what the average consumption was from 2016 to 2021.

These are what some of the EU governments have recommended:

France​

President Emmanuel Macron called for a gas use reduction of 10%, and warned that forced energy savings will be on the table if voluntary efforts prove to be insufficient. Russian gas imports account for 15% of France’s gas consumption, making it less reliant on Russia than most of its EU peers.

• Lights from the iconic Eiffel Tower will switch off about an hour earlier at 11.45 p.m., Paris’ mayor announced on September 13.
• Shop owners who leave the doors of air-conditioned stores open will be fined 750 euros ($751).
• Illuminated ads will be banned from 1 a.m. to 6 a.m.

Germany​

Germany has been the most exposed to Russian gas supply cuts. Germany’s Economy Minister Robert Habeck released a statement introducing a slew of measures which came into effect on Sept. 2 in the hope of reducing gas usage by around 2%.

• Public buildings are heated to a maximum of 19 degrees Celsius.
• Shopfronts banned from being illuminated at night.
• A ban on heating private swimming pools.

Austria​

Austria is also heavily reliant on Russian gas, obtaining over 80% from Moscow in prior years. Last week, Austria’s climate department launched an energy-saving campaign dubbed “Mission 11,” with these recommendations:

• Drive slower to save energy — at a suggested speed limit of 100km/h
• Regularly defrosting a freezer.
• Reduce shower time.

Spain​

While Spain is not as dependent as other EU members on Russian gas, which accounted for 14.5% of its imports, Spain’s Parliament has agreed to an 8% reduction in gas use.

• Air conditioning temperatures in most public buildings and businesses must not be set below 27 degrees Celsius in the summer. And heating should not be above 19 degrees Celsius during winter.
• Doors of air-conditioned shops to be closed.
• No night-time lighting of shop exteriors or public monuments.

Finland​

While 75% of Finland’s gas supply was made up of Russian imports, the country is not as susceptible to Moscow’s vagaries. Natural gas accounts for less than 6% of total energy consumption in Finland. In the last week of August, the Ministry of Economic Affairs and Employment announced a campaign titled “A degree lower,” which aims at getting 75% of Finns to reduce their own energy consumption by:

• Reducing the household temperature on a thermostat.
• Use fewer electronics, fewer light sources.
• Limit showers to 5 minutes.

Italy​

Italy imported close to 40% of its gas from Russia last year. Under an initiative by the Italian Ecological Transition Ministry, the country is targeting a reduction in gas consumption of 7% (5.3 billion cubic meters) by March:

• Thermostat in industrial buildings to be lowered by one degree to 17 degrees Celsius.
• Residential blocks’ thermostat temperatures to be regulated at 19 degrees Celsius.
• Radiators to be turned off for at least one hour per day.

Netherlands​

The Dutch government launched a campaign in April in a bid to reduce reliance on Russian gas, which comprises about 12.5% of the Netherlands’ gas use.

• Taking 5 minute showers.
• Turn down central heating.

Enough for the winter?​

Some reports estimate that if Europe can cut its gas use by 15% to March 2023, the region would be able to cope with winter despite limited supplies and soaring energy prices.
“We’re already there … savings this month have already surpassed the 15% target,” said senior energy strategist from Goldman Sachs, Samantha Dart.

Facilities of the Fluxys gas storage station in Loenhout, Belgium. The European Commission in July has agreed on a voluntary target to cut gas use by 15% by 2023, compared to what the average consumption was from 2016 to 2021.
Kenzo Tribouillard | Afp | Getty Images

She added that northwestern Europe’s estimated August gas consumption was 13% below average.

“We believe this is more than enough savings to go through winter without blackouts or a heating crisis,” Dart said, assuming that the average winter weather scenario holds.

Difficult, but not impossible​

However, according to another analyst, that target looks ambitious, especially when the winter season starts.
That period of time is where household consumption for heating “far exceeds industrial demand,” which is already down by 20-30% across most of Europe, said director of Eurasia Group, Henning Gloystein.

“Achieving the 15% reduction target vs business as usual will be difficult, but not impossible,” Gloystein told CNBC.
If Europe manages a sustained demand destruction and access to alternative gas supplies, a “severe rationing” can be avoided, Gloystein added.

A group of houses in Cercedilla, on 20 April, 2022 in Madrid, Spain when Madrid activated the Winter Inclement Plan for snow, rain and wind. A cold winter could make it difficult to achieve the demand reduction needed in Europe.
Rafael Bastante | Europa Press | Getty Images
He said that an “immediate reduction” in household consumption could come at the same time that most EU gas tariffs jump on Oct. 1, on top of aggressive media campaigns by governments.

Possible winter recession​

However, Henning cautioned that this will come at a price.
“This will almost certainly come at the cost of an EU recession over the winter which will hit low-income households and small industries hardest,” he said.
A cold winter could also make it difficult to achieve the demand reduction needed, but also increase the likelihood of supply disruptions from Norway, where offshore rigs in the the North Sea have to be evacuated during storms, Henning said.
“If just one or two of the required measures don’t work out, the situation could become quite serious, pretty quickly.”

Shorter showers, slower drives and an Eiffel Tower blackout: How Europe plans to cut gas usage this winter

From cutting down on showering to five minutes and driving slower, Europe is embarking on a goal to reduce gas use in time for winter.

www.cnbc.com

 

[TigerOfMysore]

Energy crisis: Lights go off in Europe as prices soar • FRANCE 24 English​

Sep 21, 2022

I know someone intimately involved in the energy investment area. What they mentioned was shocking.
Basically the example they gave was a $700 bill today stands at north of $4000. How this works for Europe during the winter month is anyone's guess. This will be a rough few months for the world in general.

 

[beijingwalker]

Europe will lose its heavy industry if this keeps up.

Good opportunity for China to take up their global share.

 

[rambro]

I thought US + 30 nato members + elensky regime has won, rubel became rubble.