General > General Technical Chat
"Gas Armageddon": Energy/electricity prices in EU/UK (and how to deal with them)
tom66:
As most people in the EU and UK will know, natural gas prices are rising like mad. There are a few reasons for this, although like many economic crises it is not caused by a singular factor.
I do not want to stray too deep into politics. This thread is to discuss the causes, consequences and solutions (both personal and nation/EU-wide) to the gas price crisis. Politics, such as direct criticism of current political parties, should be avoided, however, I believe it would be within the rules to discuss proposals such as subsidies, and behaviour of governments at a broad level. I rely on the moderators to guide as necessary - please advise if the thread is drifting too far.
The 'elephant in the room' is Russia's reduction of gas flows through Nord-Stream in apparent, though not admitted, retaliation for EU/NATO assistance of Ukraine and sanctions against Russia and prominent oligarchs. Russia is an important supplier of gas to the EU -- pre-invasion approximately 35% of all gas supplied to the EU was sourced directly from Russia. However, gas prices were rising long before Russia decided to invade. Russia had control over some storage facilities in Germany and was deliberately underfilling this storage, and the 2021 winter was colder and had lower renewable generation than other years. Gas prices are also on the rise because Covid lockdowns ended sooner than many expected, which created a market shock as industries rebooted.
Overall, gas futures have risen from around 18 euros/MWh pre-pandemic to over 250 euros/MWh [1] as of today. This is clearly unsustainable. It will lead to the collapse of businesses and suffering amongst those on lower incomes who cannot afford an energy bill 6-10x higher.
To substitute the missing gas, it has been proposed to build more LNG terminals and import the gas from the US, Qatar and SE Asia. But, an LNG terminal takes a substantial amount of time to build; at least 12 months. Further, there are only about 30 LNG tankers worldwide that are not contracted actively to deliver gas, but to replace just the missing Russian gas will require around 130-140 tankers, assuming each tanker runs on a 50 day supply cycle. Another issue is the tankers that Qatar can use are too large to fit through the Suez canal, and therefore have to take the long route, which further reduces their effective capacity. Further, the design of pipeline capacity is to reduce size the further into western Europe the gas goes, so LNG terminals in Spain or Portugal are no good for supplying the rest of Europe without pipeline upgrades too. Europe would need between 15-20 new LNG terminals. Whatever way you look at it, it just does not seem feasible.
With prices rising this high there is an argument towards governments that subsidies are needed for residential customers, but this is not trivial spending even for a government, At current rates, it would require in excess of £50 bn per year for the UK alone; and that ignores SMEs and larger industry. For energy-intensive industries, like aluminium smelting, it is hard to see how they could be feasible to run at 10x energy cost. Domestic customers are seeing at least a 2x cost in average bills by the end of the year, and 3-4x looks to be on the horizon. I also can't see how subsidies can work if demand stays the same, it will just cause further inflation in gas prices.
How long will the crisis last? If it requires Ukraine to prevail in the war, it may take upwards of five years. If the EU backs down, and withdraws support from Ukraine, then the crisis might reduce somewhat as gas is restored, but that is an unacceptable outcome for many and of course it is very likely to doom Ukraine to defeat. Still, it is quite possibly what Russia is betting upon.
On a personal level, I am considering adding a home battery, solar panels and super-insulating my home. These will have a large capital cost, so I am modelling whether the cost-benefit. A home battery, if charged on off peak electricity (at 3:1 or so difference), could pay back at normal usage in around 3-4 years, if the install is done myself. If solar is added, then the system can save even more in the summer, however it increases the overall cost. I've looked at the cost of insulation, and it's surprisingly expensive, but if prices rise then it may just need to be a cost that is swallowed. What personal actions are people taking to reduce their exposure to the increase in costs?
[1] https://tradingeconomics.com/commodity/eu-natural-gas
SiliconWizard:
Sure, install solar panels if you can afford them and own your house. And hope for the best - meaning, hope your government won't take measures to absurdly tax solar panels/electricity coming from them. I'm not holding my breath for those thinking they can get away from inflation on energy prices in some way. Yeah uh, not very optimistic?
daqq:
Any tips and tricks for flat-dwellers?
bingo600:
DK electricity prices hit a 10 year all time high today - :scared: :-\
1 Kwh = 1.27€ - between 19.00 & 20.00
DK State taxes included in the above approx 30..40% of the above - They're cashing in biiiggg time on the increased "Spot prices"
Lowest price in this 24hr window is 0.83€/Kwh
/Bingo
nctnico:
IMHO: if you still have to insulate now, then you are too late. You'll be paying crazy prices for insulation material -if you can buy any-. Same for solar panels. Better ride it out. Buy a few extra sweaters and set the heating lower.
Maybe you can buy some materials on the second hand market and get a good deal. I recently swapped all the windows in the attic with used (good as new) ones with better glazing / higher insulation grade. The old ones where drafty due to degraded seals so I hope I'll keep more heat in this winter.
Actually the saddest part of the gas crisis is that the Netherlands is -literally- sitting on a huge gas bubble but it won't be used due to earth quake damage. But when push comes to shove, I assume the Dutch government will budge and replace whatever Russia isn't delivering. It is not like we don't have any gas in Europe.
For now high gas prices are a good motivator to switch to renewables which don't run out and can be sourced from many different sources. Let's call that a good thing.
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