Antoine Lardeux, gas market analyst at Volue, says the price of energy in Europe has followed the fluctuations of gas prices like a shadow. The result: Dramatic variations in European energy prices - and public outcry.

"The highest priced energy source in the market dictates the price of power. Gas is what fuels electricity plants in Europe, providing balancing power to the grids when output from wind and solar energy drops. High gas prices due to shortage of gas will continue to dictate energy prices in Europe, at least for another year or two", says Lardeux.

WHY SO VOLATILE?

According to Lardeux, the current situation is the result of a combination of events.

"It all started in the fall of 2021 when Russia cut gas supplies to Europe. Next came a dry winter with reduced hydropower production, while French nuclear power plants were interrupted. There was already a shortage of energy when Russia invaded Ukraine and "weaponized" gas. The combination of less gas, less nuclear, and less hydropower was disruptive to the market", says Lardeux.

Actually, it could have been worse, if it hadn't been for Asia being hit by a new wave of Covid, which led to falling demand for liquified natural-gas, LNG, in many Asian countries.

"LNG found its way from Asia to Europe. Somewhat limited by capacity in European ports, LNG still helped fill European gas reservoirs. This undoubtedly slowed price growth," says Lardeux.

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Volue AS published this content on 31 January 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 February 2023 15:47:07 UTC.