In Kosovo, the power goes off every six hours. It’s the first European country to suffer rolling outages as the energy crisis escalates. In an effort to avoid that fate, Europeans are taking colder showers, offices are turning down thermostats and stores are dimming their lights. In the UK, waiting times for new solar installations have more than doubled as householders try to power their own homes ahead of an 80% surge in retail bills. But Javier Blas has some good news about the coming winter after listening in on conversations between electricity traders and the managers of the UK national grid.
Ha, no he doesn’t. Here’s a sample of questions asked recently on the weekly call between those on the front lines of the energy market and the executives responsible for keeping the lights on:
• “Are you war-gaming possible options for if/when cross-border trading collapses under security of supply pressures this winter?”
• “Can we have a session where we talk through the emergency arrangements?”
• “If a system-stress event is active in both gas and power, how do the electricity system operator and gas control center communicate? Which stress event takes priority?”
Energy prices across Europe have surged. On Friday, European natural gas was headed for its biggest weekly gain in over two months, with prices rising for a sixth consecutive week as Moscow squeezes supplies. German benchmark power prices for next year rose above 800 euros ($800) per megawatt hour, nearly 10 times higher than the same period last year. French year-ahead power rose above 1,000 euros for the first time. UK day-ahead electricity is trading at 10 times its two-decade average.
Javier has three takeaways from the teleconferences he’s listened to. First, the looming power crisis is worse than industry executives publicly acknowledge, and a lot more dangerous than governments admit. Second, high prices are a big problem, but security of supply is at risk, too. Third, time is running out to make emergency preparations before temperatures start to drop.
“Imagine being able to overhear conversations between Wall Street executives and the Federal Reserve as the global financial crisis unfolded in 2008,” Javier writes. “European governments have a duty to come clean with their voters about the magnitude of the coming crisis.”
Bloomberg
