Pull, railroad! – Newspaper Kommersant No. 241 (7442) dated 12/27/2022
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The increase in electricity prices in Europe has led to a sharp increase in the cost of railways in the region to provide electric traction. In France, electricity prices for traction have increased by more than eight times. UK Network Rail’s electricity costs will exceed £1bn in 2023, with EU railways’ total additional costs estimated at €10bn. for railways in the EU increased by 300-1000%, the cost of diesel fuel increased by only 70%.
French Railways (SNCF Reseau) raised the tariffs for the purchase of electricity for traction for rail carriers for 2023 by 8.5 times – from €56 to €473.5 per 1 MWh. According to Alliance 4F (Fret Ferroviaire Francais du Futur), an association that unites rail carriers and operators, the lack of state support for such an increase in energy prices carries the risk of increasing costs throughout the country’s transport chain, including for multimodal transportation, by 15–20%. Alliance 4F asked the country’s Minister of Transport Clement Beaune a month ago to set a ceiling on the price of electricity for traction at €180 per 1 MWh and subsidize the costs of operators to pay for SNCF Reseau services, however, the organization says, the state is still silent.
France is not the only country in Europe where the energy crisis has increased rail transport costs. In September, UK Network Rail reported that electricity costs for traction would increase from £595m to £885m in 2023-24, with total energy operating costs rising from £670m to more than £1bn.
According to the estimates of the Community of European Railway and Infrastructure Companies (CER), European railways already today purchase electricity at an average cost of €200 per 1 MWh. The maximum fixed price is €870 per 1 MWh. Next year, the average purchase price is expected to be €300-400 per 1 MWh, and according to the forecasts of railway operators – at the level of €500. According to Eurostat, European railways consume 50 billion kWh of electricity per year, that is, they account for about 2% of electricity consumption in the EU.
CER estimates the additional costs of EU railways, given the high level of their electrification, caused by rising energy prices, at €10 billion per year.
The increase in the cost of electricity for railways intensifies their competition with vehicles and causes the replacement of electric traction, which prevails in the EU (80% of freight and passenger traffic), with diesel traction. In Hungary, where more than 90% of rail traffic is electrified, this year companies began to bring diesel locomotives to the network instead of electric locomotives in order to save money. The European Rail Freight Association (ERFA), the International Union of Rolling Stock Operators (UIP) and the International Union of Multimodal Rail-Road Carriers (UIRR) said in a statement that electricity prices for traction have increased by 300-1000% in the EU. , while the cost of diesel fuel is only 70%. “Without intervention from EU member states, higher electricity prices will eventually lead to a reduction in the share of rail transport or even a move away from it to more energy-intensive, but cheaper, oil-fired vehicles,” CER warns.
In some cases, government subsidies to industrial consumers help contain costs. Thus, the German parliament recently approved a reduction in the cost of electricity for industry to 13 cents per 1 kWh, such a preferential price is valid for 70% of the enterprise’s consumption (based on data for 2021). Conor Fian from ERFA hopes that the support measures taken by Germany, including railways, will cause a domino effect in other EU countries. But in general, RailFreight.com quotes him, “the approach of EU member states ranges from very modest assistance to worsening measures to subsidize the cost of diesel fuel.”
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