Olivia Lacenová: Electricity prices are rising due to lack of water

As the Nordic reservoirs are only half full, which means that their level is the lowest at this time of year in ten years, the Norwegian state energy company Statnett SF was forced on Monday to issue a statement that the energy balance is at the 2nd level. To better illustrate, if the situation worsened and reached the 5th level, it would be necessary to proceed with the allocation of energy, the shortage of which is currently struggling, for example, China, where companies from various sectors stopped production due to energy outages. As a result, this can mean a further increase in the price of various goods around the world, which depends on components from local suppliers.

But let’s go back to Europe. As winter approaches, which means increased energy production and consumption, reservoir levels will fall, exacerbating current concerns about possible energy shortages and the deepening crisis. The lack of water in the Nordic countries may mean that they will not be able to export energy. At the same time, restricting exports could negatively affect the economic growth of the countries concerned.

Due to the problems that have arisen, Scandinavia has relied on old and proven classics and is currently relying on obsolete fossil power plants to generate electricity. The Swedish energy company Vattenfall, one of the leading energy producers in Europe, is trying to persuade large customers, such as industrial companies, in particular to try to save as much energy as possible before the coming winter.

In addition to the Nordic countries, countries such as Austria, Italy, Spain, France and Germany, which mainly support the development of small hydropower plants, also participate in the energy mix from hydropower plants. These are considered to be a better alternative to large hydropower plants, which can have a secondary negative impact on the environment, and it is for this reason that their construction is legally prohibited in Sweden, for example. The development of small hydropower plants in recent decades has also been recorded in the Czech Republic, Poland and Slovenia. At the same time, all the countries mentioned may be affected if the concerns about the lack of rainfall that have arisen in connection with the Nordic countries in the coming weeks are fulfilled and put into practice. For example, the aforementioned Austria, whose installed capacity in hydropower exceeds half of its domestic energy capacity, may be among the most affected. Climate change may thus hit European energy in an unexpectedly sensitive place.

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However, energy is also becoming more expensive, with a shortage of natural gas, which is also gradually manifesting itself throughout Europe. It was caused by the high demand for the commodity during the pandemic, from which, for example, Asia is recovering. The United States is struggling with reduced supplies after Hurricane Ida, and Russia’s refusal to increase supplies to Europe via Ukraine has exacerbated the situation. Coal prices are also rising. Among the countries most affected by the energy crisis will undoubtedly be the United Kingdom, where, according to S&P Global Platts, the price of natural gas rose by 420 percent during the year.

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Source: E15.cz by www.e15.cz.

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