Page 36 - bne monthly magazine October 2022

36 I Cover story bne October 2022
Perfect storm
With Europe’s power system so
finely balanced, a perfect storm has developed. Europe’s drive to invest
into alternative clean energy solutions while decommissioning emission dirty generators has resulted in a profound energy supply-demand imbalance. That has been exacerbated by the stronger than expected bounce back of global energy demand after the peak COVID-19 crisis, as well as some really poor policy decision and neglect of energy security.
Italy closed its NPPs in the 1990s and never replaced the lost capacity. That has left it as one of the biggest importers of power in Europe. Its grid doesn’t
have enough capacity to cover its own domestic demand. The power stations it does have are heavily reliant on Russian gas as the government never bothered to diversify its supply of fuel and it never invested into renewables. Despite its long coastline, Italy doesn’t have even 1MW of offshore wind generators.
Austria has invested into hydropower, but this year’s long hot summer has seriously reduced their ability generate
Guidance
Year to year, EDF generated 19% less nuclear power. Given its ongoing challenges, it may result in 265TWh output in 2022 (26% less than 2021; 359TWh). EDF quides for 300-330TWh in 2023)
French Nuclear Power Output (in TWh): 2021 YTD: 230 TWh; 2022 YTD: 186 TWh (-19% YTd)
“Italy closed its NPPs in the 1990s and never replaced the lost capacity. That has left it as one of the biggest importers of power in Europe”
Source: Burggraben analysis; Bloomberg
sector will make it a net importer of power by 2023. The German shortage
is a problem for Germany, but it is an even bigger problem for Italy, Austria and Luxembourg that have all become dependent on German power exports to cover their own deficits.
Germany has decided to keep two of its six reactors on standby as a reserve and despite the talk to restarting its 16 coal
output options to the point where natural gas has to save the day – which we struggle to get,” said Alexander Stahel, a power and commodities expert, in a thread on twitter.
Hungary, like Austria, has invested heavily into gas-fired power plants and is even more dependent Russian gas to run them as it produces little of its own gas. The government in Budapest has been reluctant to join any of the energy sanctions on Russia as the economy minister says the economy simply “won’t function” without Russian energy supplies.
In Estonia, the state-owned energy company Eesti Energia said it was unable to produce enough electricity to meet its own domestic demand during peak consumption hours. It said this was not a big problem as long as Estonia remains connected to the Nordic electricity market where the security of supply is still guaranteed. However, this leaves the country more vulnerable to the conditions of the electricity market, such as fluctuating prices, which are out of its control.
Corrosion problems have pushed France to shut down many of its nuclear power plants, increasing the need for gas in power generation.
“France is the champion of nuclear power. It's fleet of 57 reactors should be capable to deliver 450TWh pa (62 GW installed). But it does not,” says Stahel.
power and the country’s generating capacity is not enough to meet the domestic load demand. Austria became dependent on neighbour Germany to supply it with its missing power.
That would not be a problem but in 2020 Germany abandoned its six nuclear reactors taking 4GW of power off the grid, which is equivalent to 32TWh of power, or around 4.5% of the 700TWh that is traded in Europe every year, according to European network of transmission system operators for electricity (ENTSO-E).
Germany has been a net exporter of power, but the remake of its power
www.bne.eu
fired plants only one or two can be used as the rest are either “too old” or lack fuel – coal used to be imported from Russian but the ban on imports went into effect on August 10 and has been highly effective.
Germany had been planning to use natural gas to plug the hole but now that is suddenly not an option it will be left with a deficit in power and has no way to replace it if gas supplies run too low. That will cause blackouts not only in Germany, but in several countries in the heart of Europe.
“Fact is that 20 year of German Energiewende systematically reduced its dispatchable (frequency reliable) electricity