Shortly before the arrival of winter, the energy crisis that has gripped Europe brings the threat of recession and social destabilization closer. Events triggered by a frenzied gas price race, and a combination of factors exacerbating the problem of electricity prices and energy availability, are driving governments to despair as they are forced to erase and rewrite budgets in a vain attempt to find an effective recipe for governance.

Against the background of the panic caused by the new natural gas rally, with the price of the Dutch TTF breaking one record after another, exceeding 322 euros / MWh, and electricity prices in the wholesale markets even touched 800 euros / MWh to move steadily above 600 euros / MWh and forward contracts for next year will be traded at a price of 1,000 euros/MWh, the Czech Presidency announced the convening of an extraordinary meeting of EU energy ministers. consider new anti-crisis measures, including setting a ceiling on electricity prices.

As the crisis deepens, more and more leaders in Europe are realizing that subsidies and austerity programs are not enough to put out the fire fueled by high prices, with countries in the South expecting that after the pressure that the North is also experiencing, it may be possible to find a common basis for a single solution. Prime Minister Kyriakos Mitsotakis reaffirmed the need for a European solution in a conversation with his Czech counterpart on Wednesday. Greece, stressed the Prime Minister, supports society through national measures, but will continue to demand a European solution to the energy crisis, since no single national budget can cope with this unprecedented crisis alone.

European countries have so far spent 280 billion euros on social support measures, according to the Brueghel Institute data published by Bloomberg, with Greece ranking first as a percentage of GDP (3.7%), with 6.8 billion euros to date.

Amid the panic caused by a new natural gas rally, the Czech President announced the convening of an emergency meeting of energy ministers.

The fund will increase as electricity prices rise and will increase even more from October, when natural gas consumption for heating will also start. The total electricity and natural gas subsidy bill for the coming months is estimated by the government’s economic staff to reach 12 billion euros by 2022, with an estimated natural gas price of 270 euros/MWh. Of these, 10 billion will be contributed by the Energy Transition Fund (TEF) from revenue generated from excess profits from the wholesale market, pollutant auctions and the YKO account, and 2 billion will be contributed by the budget after the amendment. to cover an unforeseen amount of 1.2 billion euros, since 800 million were provided in the budget. If the natural gas rally continues, much larger subsidies will be needed by the end of the year. If high prices persist beyond the first half of 2023, the problem will take on a different dimension, as there are no budgeted expenditures and, according to calculations, this will also affect the primary surplus.

The new operating mechanism of the wholesale electricity market, which allows extracting excess profits from the “source”, brought in 1.273 billion euros as of August 25. The Fund received EUR 691.5 million from RES, EUR 236.9 million from lignite, EUR 178.8 million from hydropower and EUR 165.9 million from natural gas. By the end of August, it is estimated that about 40 million people a day will be added to TEM. The higher the income of TEM, the lower the percentage of budget participation in financing subsidies, which makes even the people of the financial staff every day anxiously monitor whether it is windy or sunny. This is because RES production will largely determine the direction of TEM revenues in the coming months, lignite is a small part of the mix and therefore the reduction in RES production is being replaced by more expensive natural gas. It is indicative that the apnea of ​​recent days limited the production of RES to 5-15% during the period from 17 to 26 August, catapulting the participation of natural gas to 58-63%. The share of brown coal has recently stabilized at 20%-24%. The maximum production potential of lignite plants, due to their age and limited fuel reserves, is estimated at 12 terawatt-hours per year, and this is the PPC target after the government’s decision to double lignite production in order to contain the cost of electricity, but also to ensure adequacy in case of power outages Russian gas.

The high share of natural gas in electricity generation, combined with the dynamics of the market price of fuel, led to a nominal increase in the price of kilowatt-hours by more than 40% in September compared to August and increased the subsidy account to 1.9 billion euros. The government, in order to keep tariffs at the level of 14-17 cents per kilowatt-hour, as it promised, absorbed 94% of the increase, increasing the subsidy per kilowatt-hour from 33.7 cents in August to 63.9 cents in September.

Greece has for now escaped the price storm that has hit other European countries as the main electricity interconnection with Western and Central European markets, which assesses a shortage of French nuclear production, has failed. from 24 August. It is an underwater electrical cable connecting the Italian market, which, due to its high dependence on natural gas, has become the most expensive in Europe. The re-opening of the cable on September 3 will allow 500 MW to be exported to Europe’s most expensive market, driving up prices in Greece. At present, the disadvantage – for normal conditions – of limited interconnections in our country has worked as an advantage and kept prices in the wholesale market at 400 euros/MWh, at a distance between 600 and 700 euros/MWh. euro/MWh of its once-competitive Western and Central European markets with multiple interconnections and a wide variety of fuel mixes (nuclear, RES, hydropower and chased by cheap Russian natural gas…).