European energy prices are falling sharply amid signs that the European Union is stepping up efforts to ease an energy crisis that could plunge the region into recession as winter approaches.
In Europe, all eyes have been on the largest economy, Germany, of late. Its wholesale electricity price gives us a picture of Europe’s energy situation.
The price of electricity has fallen significantly
The price of electricity for the German market soared to a record €1,050 per MWh on Monday, and it looked as if its meteoric rise was not going to stop. Today, however, it fell by 26%, but later erased some of the losses and the price was just above €600.
The EU is preparing to intervene in the short term to mitigate soaring electricity costs, which are fuelling inflation and increasing the risk of recession.
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European Commission President Ursula von der Leyen commented.
“Rocketing electricity prices today reveal, for different reasons, the limits of our current electricity market design. It is no longer fit for purpose. That is why we as a commission are working on crisis intervention and structural reform of the electricity market. We need a new market model for electricity that actually works.”
The EU’s next move will be to build wind farms, which was a big topic at the Baltic Sea Summit. Ursula von der Leyen had this to say on the subject.
The EU aims to produce 60 GW of energy from offshore wind by 2030. And the Baltic Sea region can provide a third of it.
When offshore turbines are linked to more countries, we save costs, and the energy produced is never wasted.
— European Commission 🇪🇺 (@EU_Commission) August 30, 2022
Germany continues to evaluate whether it is worth postponing the planned shutdown of nuclear power plants. The country plans to close the last three nuclear power plants for good at the end of this year.
Gas is also a big topic
In addition to electricity, Germany is strengthening its energy security because of uncertain gas supplies from Russia, which are suspended due to the need to shut down the main Nord Stream 1 pipeline.
However, in our recent article, we informed that Germany is doing a great job of filling its gas storage facilities, which are already more than 80% full and above its plan. The plan is to have the storage tanks 85% full by October and then to have them 95% full by November.