The Surging News reporter Yang Yang
In the last winter when global oil, gas and coal prices soared together, Europe was the focus of international energy supply shortages. Due to the high dependence on foreign energy, low natural gas inventories, and the output of new energy sources is less than expected, fuel price fluctuations are transmitted to electricity prices, and many European countries experienced a sharp rise in energy prices in the second half of last year. So, how much impact will the energy crisis have on household consumers' energy bills?
According to data released by Eurostat recently, in the second half of 2021, the average household electricity price in the EU will increase significantly compared with the same period in 2020, and the price per 100 kWh will rise from 21.3 euros to 23.7 euros (Note: kWh is referred to as degrees, that is, the price equivalent to 0.237 euros per kilowatt hour), up more than 11% year-on-year. Over the same period, natural gas prices also increased significantly, from €7 per 100 kWh in the second half of 2020 to €7.8. Recently, wholesale electricity and gas prices across the EU have risen sharply, driven by changes in energy and supply costs triggered by multiple economic factors.
Eurostat said that in the second half of 2021, taxes and fees accounted for 36% of household electricity bills and 30% of gas bills. This price structure has not changed significantly compared to the previous year.
Eu household electricity prices (red) and gas prices (green) trends since 2008 (in units per 100 kWh, including taxes). Image source: Eurostat
Statistics show that household electricity prices in other EU member states rose in the second half of last year, with the exception of Slovakia and Hungary. Compared to the second half of 2020, the largest increases (in national currencies) in household electricity prices in the 25 EU member states in the second half of 2021 were Estonia (+50%), followed by Sweden (+49%) and Cyprus (+36%).
The darker the change in electricity prices for EU household consumers, the greater the increase (shown in the figure is the year-on-year increase in the second half of 2021 compared to the second half of 2020, based on the price of each country's currency. Image source: Eurostat
In euros terms, the lowest average household electricity prices per 100 kWh in the second half of 2021 were in Hungary (€10.0, or €0.1/kWh), Bulgaria (€10.9), Croatia (€13.1), with the highest being Denmark (€34.5, or €0.345/kWh), Germany (€32.3), Belgium (€29.9) and Ireland (€29.7).
In terms of natural gas, 20 of the 24 EU member states that reported household gas prices saw price increases. In terms of national currencies, the largest increases in household gas prices were in Bulgaria (+103%), followed by Greece (+96%) and Estonia (+83%). In contrast, only Slovakia, the Czech Republic and Portugal saw gas prices fall.
The change in gas prices of EU household consumers, the darker the color, the greater the increase. (The chart shows the year-on-year increase in the second half of 2021 compared to the second half of 2020, based on the prices of each country's currencies.) Image source: Eurostat
In euros terms, the lowest average household gas prices per 100 kWh in the second half of 2021 were in Hungary (€3.1), Croatia (€4.0) and Lithuania (€4.1), with the highest in Sweden (€18.6), Denmark (€12.5), the Netherlands (€11.0) and Spain (€10.8).
Due to the different resource endowments and energy structures of European countries, the impact of fuel price increases in 2021 on electricity prices is different, and wholesale electricity prices in some regions remain stable and soar in some regions.
According to an analysis article by the State Grid Energy Research Institute, for example, Norway, because 98% of its electricity supply comes from hydropower and natural gas resources, the overall price fluctuation is small, the average price from January to October 2021 remains at about 30 euros / MWh, although the average price in November and December has risen, but the average price for the whole year is 35.02 euros / MWh. The wholesale market prices in Spain, the United Kingdom, France, Germany and other countries have soared, and the average monthly market price before December has increased by 299%-406% compared with the average price in the first half of 2021.
Taking Spain as an example, from January to June 2021, the average market price was 58.58 euros / MWh, and the price of electricity has continued to soar since July. In October, the average monthly price of the electricity wholesale market reached 207.49 euros /MWh, and in December, the average price of the electricity market continued to soar to 239.17 euros/MWh, four times the average price in the first half of the year. On December 23 last year, the single-day wholesale electricity price reached a full-year peak of 409 euros/MWh.
According to the above analysis article data, in Germany, in June 2021, the average market price increased by 40.2% from May to 74.33 euros / MWh; since then, the price has continued to climb, as of December, the average monthly market price in Germany was as high as 221.06 euros / MWh, an increase of 299.3% over the average price from January to June. The highest wholesale electricity price per day occurred on 21 December at €431.98/MWh.
However, it should be noted that the surge in wholesale electricity prices does not mean that the retail prices faced by consumers will rise by the same amount. The change in electricity prices at the consumer end is also directly related to the structure of electricity sales contracts and the price supervision policies implemented by some countries for the retail market. Since the second half of last year, especially after the Russian-Ukrainian conflict exacerbated the European energy crisis, most EU countries have adopted tax cuts and subsidies to protect consumers from the impact of the surge in energy prices.
A typical example that illustrates the difference between the two is the recent news that "French electricity prices have soared by 400%" that has been hotly discussed on the Internet. The surging news inquired about public data and found that compared with the same period last year, the wholesale electricity price in France rose by 3-4 times. But because france introduced regulatory measures to limit energy prices, consumers face a 4% increase in electricity prices, which will remain until the next regulatory adjustment cap.
This part of the soaring cost did not disappear in a vacuum, and it was the French government that controlled more than 80% of the money and was supposed to make higher profits due to the sharp rise in electricity prices .EDF.
In January, after France announced its intervention and restrictions on household energy prices, as well as EDF's announcement of an extension of the outage of five nuclear units and a reduction in its annual nuclear power generation target, rating agency Fitch downgraded EDF's Independent Credit Status (SCP) from "bbb+" to "bbb", arguing that the above factors would cause a major financial blow to EDF. The company believes that the EBITDA defined by Fitch in EDF in 2022 is about 4 billion euros, a 75% decrease from the previous estimate. Other market agencies estimate that EDF will lose between 7.7 billion and 8.4 billion euros in 2022 due to government restrictions on electricity price increases.
French Finance Minister Bruno Le Maire said in January that if the government did not intervene, the electricity bills faced by the French would rise by 35 to 40 percent.
From the above timeline, it is not difficult to see that the rise in European electricity prices did not occur after the outbreak of the Russian-Ukrainian conflict, which is the result of multiple factors. However, in the face of the risk of Gazprom supply, the overall increase in the energy market this year is more intense than last year, and Europe will face a more significant increase in electricity prices.
The EURO and the European Union saw their PPI rise sharply in March
The industrial sector will be hit more directly. According to data released by Eurostat on May 3, the EU Industrial producer prices rose 5.4% month-on-month and 36.5% year-on-year in March. The main reason for the larger-than-expected increase was the high level of energy prices.
Editor-in-Charge: Li Yuequn
Proofreader: Liu Wei