Denmark faces an ‘uncertain winter’ after Russia cuts gas supplies to Europe

Germany’s power contract last year reached €995 ($995) per MWh, while the French equivalent soared above €1,100. That’s more than ten times his increase from last year in both countries.

In the UK, energy regulator Ofgem has announced that it will almost double the price cap for electricity and gas from 1 October to an average of £3,549 ($4,197) per year.

Ofgem blamed the surge in global wholesale gas prices after the lifting of Covid restrictions and supply restrictions by Russia.

The Czech Republic, which holds the European Union’s rotating presidency, announced on Friday that it would host an EU energy crisis summit “as soon as possible”.

Energy prices in Europe are soaring as Russia cuts natural gas supplies to the continent. Amid tensions between Moscow and the West over the war, there are fears of even more drastic cuts in the winter.

One-fifth of Europe’s electricity is generated by gas-fired power plants, so reduced supply will inevitably lead to higher prices.

European gas prices reached €341/MWh on Friday, close to the all-time high of €345 set in March.

War is not the only culprit in France.

The shutdown of several reactors due to corrosion problems has contributed to higher electricity prices in France as domestic electricity production has fallen dramatically.

Only 24 of the 56 reactors operated by energy giant EDF were operational on Thursday.

Read also: France extends shutdown of four reactors amid corrosion problem

France, traditionally an exporter of electricity, has now become an importer.

“Winter is going to be a tough time for all European countries,” Giovanni Sgaravatti, a research assistant at the Bruegl Think Tank in Brussels, told AFP.

“Prices remain high and could go higher,” he said.

Read also: Air conditioners, ties and lights: how Europe saves energy and survives winter without blackouts

A recession is ‘probably inevitable’

According to a Bruegel study, European Union countries will allocate €236 billion from September 2021 to August 2022 to protect homes and businesses from rising energy prices. Energy prices have started to rise as countries emerge from COVID-19 restrictions and surge after the war.

In recent days and weeks, countries have announced energy conservation campaigns encouraging their citizens to reduce their electricity consumption during the winter months.

Germany announced on Wednesday that it will limit the temperature of its administrative bodies to 19 degrees Celsius (66 degrees Fahrenheit) and turn off hot water this winter.

German measures It also includes a ban on heating private pools for a period of six months from September when the decree will come into effect.

Finland encourages its citizens to turn down the thermostat, a national tradition, to spend less time in the shower and less time in the sauna.

French households are currently protected by an energy price cap until December 31st.

Industry has also been affected by rising energy prices.

Plants that produce ammonia, a raw material for fertilizer, announced this week that they would suspend operations in Poland, Italy, Hungary and Norway.

In a memo, HSBC bank warned that a “recession is probably inevitable” in the eurozone, with the economy contracting in the fourth quarter and first three months of 2023.

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