By Adewale Sanyaolu
Europe is facing a perfect storm of increasing demand for energy in the wake of the COVID-19 pandemic, and a dwindling supply of natural gas used to produce electricity.
As Europe’s struggling energy markets look to import any form of affordable energy they can, power producers have resorted to asking for Russian coal as well.
Europe is competing with Asia for limited energy resources as both continents surge back to life as pandemic restrictions ease.
Energy prices are through the roof across Europe as demand surges and supplies tighten in the wake of the novel coronavirus pandemic.
Over the course of the global economic shutdown, energy production has decreased considerably as industries shut down, people stayed inside, and demand for electricity and fuel plummeted. Now, as the world returns to work and gets back to the ‘new normal’, energy demand is back with a vengeance, but the energy supply simply isn’t there.
Europe’s leading natural gas benchmark, the Dutch Title Transfer Facility, reports that prices have skyrocketed from €16 per megawatt-hour at the beginning of this year to €75 by mid-September, representing an increase of more than 360 per cent.
Italian officials have warned their citizens to expect a 40 per cent increase in their bills in the coming weeks and months.
Spain has agreed to send €100 payments to over 5.8 million low-income households and sent a letter to Brussels pleading with the European Union (EU) to take sweeping action.
And then there’s Russia. Nearly half of all-natural gas imports in the EU come from the great white north, making Europe highly dependent on the Kremlin for its energy security. This dependence is a big part of the reason that Europe is now entering into an energy crisis, because as demand for natural gas has surged, Russia has not increased its exports to the EU.