How Ukraine cut off electricity supplies affected Europe

The gas future is still more important for the EU

Since Tuesday, October 11, Ukraine has stopped exporting electricity to the EU countries. This decision was made after Russian strikes on infrastructure facilities on the territory of Nezalezhnaya, which led to a partial blackout. The cessation of energy exports is an inevitable step, since Ukraine itself needs to restore its electricity supply. However, the decision may well affect Europe, which is already going through a difficult time right now. But abroad they continue to talk about gas, completely ignoring Kyiv’s statements.

Europe needs to pay for imports of liquefied natural gas, pray for a mild winter and cut energy demand as any sabotage of infrastructure or even more severe supply cuts from Russia will make power rationing or blackouts all but inevitable, Reuters writes in an analysis.

Europeans should not focus only on the short term, because even if they manage to somehow warm themselves in winter and save light, then in the future a more difficult task will appear. It will be necessary to somehow replenish the depleted storage facilities next year. As noted by Reuters, this is much more difficult than meeting the European Union’s goal of increasing stocks to 80% by November this year. Although the goal has been achieved (the storage facilities are 90% full), however, the incidents at Nord Stream and the prospects for further gas relations only increase uncertainty.

Western analysts estimate the gas shortage at almost 15% of the average European demand in winter. This means that the continent needs to reduce consumption in order to survive the peak heating demand season.

Germany was the most affected party, since Berlin is one of the largest importers of Russian gas on the continent. And if before the explosions on gas pipelines in the Baltic there was still a fragile hope for the resumption of supplies, now it already looks like a pipe dream.

Reuters fears that sanctions against the Ukrainian energy company Naftogaz could cut off one of the last active routes for Russian gas to Europe. We have now managed to build up reserves, prices have temporarily fallen from their peaks, but the wholesale price of Dutch gas is still about 80% higher than at the same time last year. And the outlook is dim. It is noted that pipeline gas supplies from Azerbaijan, North Africa and Norway have increased, but still remain well below those provided by the former leading exporter (i.e. Russia). According to analysts, Europe may face a shortage of 155 million cubic meters of gas. That is why the idea of ​​demand reduction has arisen in the EU.

But even this measure is not completely effective. The German Federal Grid Agency said household energy consumption is too high. Globally, everything is also unstable. European analysts estimate demand for gas for electricity among utilities could be up to 30% higher this year than last year. The UK has already warned of a blackout this winter as there is a shortage in Europe (London imported electricity from there). Analyst Francisco Blanche has estimated that normalization of gas prices in Europe could take five to ten years. His words are reported by Reuters.

It turns out that Europeans are more concerned about the amount of gas and its cost. Kyiv’s statement to suspend electricity exports does not cause much thought. Here the answer is as simple as possible. The fact is that in March Ukraine actually “broke off” from the energy system of Russia and Belarus, joining the unified electrical system of continental Europe. Already by the end of March, energy supplies began to Poland, a little later – to Moldova, and then to Romania and Slovakia. By September, the authorized transmission capacity was 300 MW. This, experts say, is less than 1% of the scale of the same Polish energy. In fact, of the already small number of links in the supply chain, only Moldova can be seriously affected. And, by the way, the facts are already being confirmed. Moldovan Deputy Prime Minister Andrei Spinu said on Tuesday that Ukraine had reduced electricity supplies to the country by 30%. He added that Chisinau “is in constant contact with Ukraine, the European Union and Romania in search of a solution to provide the republic with electricity.”

Therefore, Europe does not show mass anxiety in this matter, at least not yet. It is much more important at this stage to deal with the shocking price tags for energy resources. Thus, the European Union is moving closer to proposing a temporary restructuring of the electricity market by limiting the price of gas used to generate electricity. It is reported by Bloomberg. This model is called “Iberian”, since it has already been adopted in Spain and Portugal and has managed to prove its effectiveness.

In other EU countries, such a measure was only discussed, but no consensus was reached on the division of prices for gas and electricity. However, even now Germany and the Netherlands demand that the measure be considered “very carefully”, advocating that gas purchases by the Union countries take place jointly. And yet, to this extent, some analysts also see disadvantages. According to the experience of Spain, against the backdrop of lower electricity prices, the demand for gas has increased. Against this backdrop, Ukraine’s cuts in energy supplies seem like a grain of sand in a desert of other large-scale problems.