The 2022 energy crisis has created an uproar for the European energy market with extreme volatility and electricity prices reaching historic highs and unprecedented levels last autumn. As an example, France, reputed to have reasonable electricity prices in Europe, experienced an unprecedented price evolution reaching 743.84 €/MWh (according to EPEX SPOT France) at the end of August 2022, 7X the price at the same period in 2021 (106.86 €/MWh). Thanks to a warm winter weather, the prices although still volatile continue to decrease in France and have reached today more or less the prices of 2021.
Beyond this observation on electricity prices, there are some interesting points.
Indeed, the data of power generation in Europe from 22 countries show that in 2021, 70% of the cumulated electricity mix of these countries was made up of low-carbon energies (Nuclear + Renewable energy) although the trend has slightly decreased in 2022 due to many factors:
– Many nuclear reactors (32 out of 52) partially down for maintenance in France have caused a reduction in the contribution of nuclear to electricity generation in Europe of around 14%.
– Hydroelectric production decreased by 19% between January and September 2022 across Europe compared with the same period in 2021, mainly due to drought.
Many countries have then turned to coal and gas in 2022 despite high prices to compensate for the reduction in other sources of dispatchable power (electricity that can be easily switched on and off).
As Europe seeks to accelerate its energy transition, the demand for electricity will continue to grow in the coming years with the need for electricity for heat pumps in building and homes, electric vehicles and iron and steel manufacturing. To avoid shortages in dispatchable power due to lost from natural gas, nuclear, and hydro while reducing the use of coal, intermittent sources of green power (solar and wind), combined with other resources such as hydrogen, batteries, demand-side response and biomass will be required.
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