Page 26 - European Energy Innovation magazine - autumn 2022 edition

Autumn 2022 European Energy Innovation
26 ELECTRIFICATION

Energy prices, supply concerns &

decarbonisation: how to square the circle?

By Kristian Ruby (pictured), Eurelectric Secretary General

urope is facing one of the Explaining the price surge’s root have made up the bulk of it and
most severe energy crises in cause: gas they should be addressed forcefully.
decades. Mounting inflation, The EU is too dependent on imported This means taking short-term
Esoaring prices, and threats fossil fuels. This is an obvious, but emergency measures to moderate
to gas supply afflict our continent. cruel, reality. 90% of natural gas gas demand across key use sectors
Russia has been weaponising gas and 96% of oil and petroleum are and considering how to best cap
trade to neutralise sanctions and imported, with Russia as leading wholesale gas prices at a level that
destabilise the EU. Meanwhile, the supplier of both. The consequence truly protects consumers. At the same
war in Ukraine still rages, as do this of this dependence is painfully time, targeted support measures such
summer’s heatwaves, fires, and clear: gas prices have increased as energy vouchers, VAT reduction
droughts in many EU countries. dramatically since January 2021, on electricity, and energy efficiency
contributing to a rise of inflation to incentives can mitigate the price rise
In the coming months, there is no 8.1%. Russia’s invasion of Ukraine has impact on consumers and rapidly
way around a strong moderation of only exacerbated these trends. relieve the pressure without distorting
energy demand. For the medium market and investment incentives in
and longer term, the good news Since electricity wholesale prices electricity.
is we have the solution to tackle follow pay-as-clear market rules,
the twin energy and climate crises: natural gas has become the price Electrifying our way out of the
electrification. This is the cleanest, setter, driving the electricity price energy crisis
most cost-efficient solution to surge. While wholesale prices rose Electrification can curb imports by
reduce our dependence on fossil fuel 178% compared to January 2021, enabling the switch from fossil fuels
imports, improve energy security, and fixed-term contracts temporarily to domestic clean and renewable
abate price volatility while striving to shielded the bulk of retail prices. New electricity. Heat pumps and electric
decarbonise our economy well before contracts in several capital cities, arc furnaces can replace up to 57% of
2050. Roadblocks to this untapped however, have shown an increase of the gas consumed by buildings and
potential exist, but we know the 84% from January 2021 to June 2022. industries for hot water, space, and
way forward. Now, what we need is process heating. These technologies
concrete enabling measures to make What is the root cause of this surge? are four times more energy efficient
sure that ambitions turn into reality. The data is clear: gas price increases than gas-fuelled boilers, enabling

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