Energy ministers of the EU formally agreed to the new emergency measures originally proposed by the European Commission in mid-September to tackle the energy crisis. The measures include:
- a voluntary target to reduce gross electricity consumption by 10%
- a mandatory target to reduce electricity consumption by 5% during peak hours
- a price cap on market revenues at 180€/MWh for electricity companies that generate electricity using inframarginal technologies, including renewables, nuclear and lignite, with the surplus revenues generated by the cap to be distributed to support consumers and a mandatory
- temporary solidarity levy on the taxable profits of companies in the petroleum, natural gas, coal and refinery sectors, which will be used to offer financial support to private consumers and businesses struggling with high electricity prices
Regional governments announced new mitigation measures to support private consumers and domestic manufacturers during the upcoming winter.
Planned power cuts and unplanned large-scale blackouts remain possible across the continent. National electricity providers in Germany, France, and the UK have already warned that they may have to enforce power cuts and load shedding of several hours in an emergency. While other European countries could step in to support their neighbours if only a small number of countries experiences a blackout, the EU Commission would have to draw on emergency reserves during a widespread blackout on the continent.
Production disruptions climb in energy–intensive industries
Temporary stoppages or partial capacity reductions continue to reverberate unabated, particularly in Germany, where Everstream Analytics has tracked more production impacts than in any other country.
Aluminium manufacturers in other parts of Europe have implemented similar measures. In the chemicals sector, companies in Germany, Romania, and Spain have extended production halts and announced plans for large scale layoffs or permanent plant closures to address growing costs and falling demand.
Pharma manufacturers may be forced to stop making some generic medicines due to soaring costs. Raw material prices have risen by up to 160%, while energy costs have increased tenfold for some pharmaceutical manufacturers. As a result, industry representatives are calling for the pharmaceutical sector to be exempted from regional plans to reduce electricity consumption and give manufacturers more leeway to raise drug prices.
Governments look for alternative sources of gas as storage fill rates stagnate
As gas deliveries from Russia remain halted indefinitely, some countries that used to be dependent on Russian energy supplies are finding new sources. The Baltic Pipe, which will transport natural gas from Norway to Poland via Denmark and the Baltic Sea could run at full capacity by the end of November, a month earlier than anticipated. Greece and Bulgaria started the Interconnector Greece-Bulgaria (IGB) pipeline on October 1 that is initially expected to transport around one billion cubic metres of gas from Azerbaijan to Bulgaria. With an initial capacity of up to three billion cubic meters per year, the pipeline could also carry gas to Serbia, North Macedonia, Romania, Moldova, and Ukraine in the future.
Weather indicators to watch as winter develops
Overall, winters in Europe are warmer now than in previous decades; the last colder than normal winter in the region was in 2016-17.
Warmer-than-normal SSTs have emerged in recent weeks and months. If this continues in the North Atlantic (which computer models indicate), this points to periods of cold weather especially during the early part of winter in late November and December
Other key variables to watch are how the Polar Vortex strengthens through October, and how snow cover builds across Siberia, both of which are key pieces to the forecast. Energy supply remains volatile as governments announce wide-ranging mitigation measures