How much have household energy bills in Europe risen amid the energy crisis?
In the last winter when the global oil price, gas price and coal price all soared, Europe was the focus area of international energy supply shortage. Due to high dependence on external energy, low natural gas inventories, less than expected new energy output, and fuel price fluctuations being transmitted to electricity prices, many European countries experienced a surge in energy prices in the second half of last year. So, how much of an impact does the energy crisis have on household consumers' energy bills?
According to data released by Eurostat recently, in the second half of 2021, the average electricity price of EU households will increase significantly compared with the same period in 2020. The price of electricity per kilowatt hour was 0.237 euros), an increase of more than 11% year-on-year. Natural gas prices also increased significantly over the same period, from €7 per 100 kWh in the second half of 2020 to €7.8. Recently, wholesale electricity and natural gas prices have risen sharply across the EU, driven by changes in energy and supply costs triggered by a variety of economic factors.
According to Eurostat, in the second half of 2021, taxes will account for 36% of household electricity bills and 30% of gas bills. Compared to the previous year, this price structure has not changed significantly.
Statistics show that, with the exception of Slovakia and Hungary, household electricity prices rose in all EU member states in the second half of last year. In the second half of 2021 compared to the second half of 2020, the largest increase (in national currencies) in household electricity prices in the EU-25 will be in Estonia (+50%), followed by Sweden (+49%) and Cyprus (+36%).
In euro terms, in the second half of 2021, the lowest average household electricity price per 100 kWh is in Hungary (10.0 euros, or 0.1 euros/kWh), Bulgaria (10.9 euros), Croatia (13.1 euros), and the highest in Denmark (34.5 euros). EUR, i.e. 0.345 EUR/degree), Germany (32.3 EUR), Belgium (29.9 EUR) and Ireland (29.7 EUR).
For natural gas, 20 of the 24 EU member states that reported household gas prices saw price increases. In national currencies, household gas prices rose the most in Bulgaria (+103%), followed by Greece (+96%) and Estonia (+83%). In contrast, only Slovakia, the Czech Republic and Portugal saw gas prices fall.
In euro terms, in the second half of 2021, the lowest average household gas prices per 100 kWh were in Hungary (3.1 euros), Croatia (4.0 euros) and Lithuania (4.1 euros), and the highest in Sweden (18.6 euros), Denmark ( 12.5 euros), the Netherlands (11.0 euros) and Spain (10.8 euros).
Due to the different resource endowments and energy structures of European countries, the impact of fuel price hikes on electricity prices in 2021 will be different, with wholesale electricity prices remaining stable in some regions and skyrocketing in some regions.
According to an analysis article by the State Grid Energy Research Institute, for example, Norway, because 98% of its electricity supply comes from hydropower and abundant natural gas resources, the overall price fluctuation is small, and the average price from January to October 2021 will remain at 30 euros / MW Around the time, although the average price in November and December has risen, the average price for the whole year is 35.02 euros/MWh. In Spain, the United Kingdom, France, Germany and other countries, the wholesale market prices have skyrocketed recently. The monthly average price in the market before December has increased by 299%-406% compared with the average price in the first half of 2021.
Taking Spain as an example, from January to June 2021, its daily average market price is 58.58 euros/MWh, and electricity prices have continued to surge since July. In October, the monthly average price of the wholesale electricity market reached 207.49 euros/MWh. In December, the average daily price of the electricity market continued to soar to 239.17 euros/MWh, four times the average price in the first half of the year. On December 23 last year, the single-day wholesale electricity price reached an annual peak of €409/MWh.
The data from the above analysis article shows that in Germany, in June 2021, the average day-ahead market price increased by 40.2% compared with May, reaching 74.33 euros/MWh; the price has continued to rise since then. As of December, the average monthly price of the day-ahead market in Germany was as high as 221.06 EUR/MWh, an increase of 299.3% over the average price from January to June. The highest single-day wholesale electricity price occurred on December 21, at €431.98/MWh.
However, it should be noted that the surge in wholesale electricity prices does not mean that the retail prices faced by consumers will increase by the same amount. The changes in electricity prices on the consumer side are also directly related to the structure of electricity sales contracts and the price supervision policies implemented by some countries on the retail market. Since the second half of last year, especially after the Russian-Ukrainian conflict intensified the European energy crisis, most EU countries have adopted the form of tax cuts and subsidies to protect consumers from soaring energy prices.
A typical example that can illustrate the difference between the two is the recent news on the Internet that "the price of electricity in France has skyrocketed by 400%". Peng Mei News inquired about public data and found that compared with the same period of the previous year, the wholesale electricity price in France increased by 3-4 times. But thanks to French regulations to limit energy price increases, consumers are limited to a 4% increase in electricity prices, which will remain in place until the next time regulators adjust the cap.
This part of the soaring cost did not disappear out of thin air. It was EDF (EDF), which was controlled by the French government for more than 80% and should have obtained higher profits due to the sharp rise in electricity prices.
In January this year, ratings agency Fitch put EDF's standalone credit profile (SCP) after France's announcement to intervene and limit increases in household energy prices, while EDF announced an extension of the outage of five nuclear power plants and a reduction in its full-year nuclear power generation target. The downgrade from "bbb+" to "bbb" believes that the above factors will cause a major financial blow to EDF. The company sees EDF's 2022 Fitch-defined EBITDA of around 4 billion euros, down 75% from its previous estimate. Another market agency estimates that EDF will lose 7.7 billion to 8.4 billion euros in 2022 due to government restrictions on electricity price increases.
French Finance Minister Bruno Le Maire said in January that if the government did not intervene, the French would face a 35% to 40% rise in their electricity bills.
It is not difficult to see from the above timeline that the rise in electricity prices in Europe did not occur after the outbreak of the Russian-Ukrainian conflict, but was the result of the combined effect of multiple factors. However, in the face of the risk of Gazprom supply cuts, the overall energy market growth this year is more severe than last year, and Europe will face a more significant increase in electricity prices.
The industrial sector will be hit more directly. According to data released by Eurostat on May 3, industrial producer prices in the European Union increased by 5.4% month-on-month and 36.5% year-on-year in March. The main reason for the higher-than-expected increase was high energy prices.
