The cold and lack of wind put the European electricity system through its first litmus test at the gates of winter |  Economy

The cold and lack of wind put the European electricity system through its first litmus test at the gates of winter | Economy

European electricity systems are facing the worst possible cocktail these days: cold —high demand—, no wind and cloudy skies —less supply of cheap energy—, a large part of French nuclear generation still out of the game and increases in the gas market . The result of this combination of negative factors, to which is added a drought that is weighing down hydroelectric production, is unequivocal: record prices just over a week before the start of winter, when the heating systems are smoking and domestic consumption soars. .

“Once again we are in the same situation: until the market structure changes, we will continue like this, with hypertensive markets,” says Natalia Fabra, a professor at the Carlos III University of Madrid. “What is happening now is not very different from what happened in August, when it forced the European Commission to act. And that the cold has only just begun… ”, she outlines by phone. The great corrective factor compared to then is that the price of gas in the European market is not at 350, as then, but slightly above 130 euros per megawatt hour.

In the first weeks of December, the electricity demand of the main European countries is being covered in a high percentage with thermal technologies, such as gas or coal, notes Pedro Cantuel, from the energy consultancy Ignis. For now, however, this analyst believes that “European electrical systems are reacting together and robustly, operating without excessive problems.” “They should not suffer major setbacks: significant tensions in European electricity systems seem unlikely in the short term, although the risk of some isolated congestion at some hour due to demand peaks remains.”

The United Kingdom synthesizes these days the concatenation of setbacks that threatens the countries of the bloc. Immersed in a cold wave that, however, has not brought gusts of wind, the archipelago has seen how the price of electricity in the wholesale market stood this Monday afternoon above 2,000 pounds sterling (2,300 euros ) per megawatt hour, an unprecedented value since there are records. Although the futures point to a gradual relaxation as of this Tuesday, the network manager has been forced to use two coal plants —by far, the most polluting generation alternative—, which had just gone into a period of inactivity, to be able to meet the expected demand.

The second focus of concern is France. Holder of, by far, the largest continental nuclear park, and a historic net exporter of electricity to its neighboring countries, in recent times it has seen the tables turn: today it has just over a third of its reactors out of action. A substantial drop in atomic generation —despite the recent return to activity of several of its plants— which is having an effect on both prices and the proliferation of warnings about security of supply.

“France is saving the match ball on a daily basis and is gradually recovering its lost nuclear power. This is fundamental, also for the rest of Europe”, assesses Pedro Fresco, an energy expert and, until a few days ago, general director of the Ecological Transition of the Valencian Community. “If they had not been recovering several gigawatts of nuclear power in recent days, they would have had to stop part of their industry, but they are no longer in the dramatic situation they were three weeks ago.”

In an attempt to remove any shadow of doubt, President Emmanuel Macron last week labeled these voices as “absurd” and called for “not to instill fear in the population.” “All that has to be stopped: we will get through this winter despite the war,” he added.

Gas reserves fall but resist

The biggest country in the eurozone, Germany, is also being penalized by the weather misfortune. In his case, this tension is translating above all into a greater burning of gas and coal, the only two alternatives when the renewable supply fails. In the first case, the problem is that the lack of wind is forcing the reserves accumulated in recent months to be pulled, a jewel to be preserved for the months —and years— to come. For the moment, yes, in a modest way: despite the fact that the German country has been chaining gas outflows from the deposits every day since the end of November, the good news is that the deposits continue to show a much better tone than the average historical for these same dates.

In the EU as a whole, gas reserves are today at 88%, 30 points more than at this time last year and notably above the historical average. Along with the containment of gas demand, which has accumulated a 15% drop in recent months, this good tone in deposits is the greatest element for optimism. Except for a large cold wave, which currently no weather forecast contemplates, the winter of 2022 seems moderately under control. That of 2023, especially if the reserves arrive in the spring in the chassis, will be another story.

The gap between Spain and the rest grows

The adverse conditions in the main continental electricity markets have been transferred to Spain to a much lesser extent: despite the recent rise, the price gap with respect to the rest has not stopped growing. A part of this effect can be attributed to the lower cold in the Iberian Peninsula. Another, because the wind stoppage has been less. But a substantial fraction also has to do with the application of the Iberian mechanism, a kind of firewall that partially slows down the contagion effect on electricity due to the increase in gas prices. “If things are better in Spain, it is because of the gas cap,” says Fabra.

An assessment to which Fresco adds: “In October and November it was not relevant due to the greater renewable production and the cheaper gas, but it is very clear that the cap on gas works,” he slides. “It is something that was already demonstrated in the summer and that is being demonstrated again now: although it is counterintuitive, it works better when, as happened then and is happening again now, the price of this fuel is higher.”

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