The gas is blazing: will it be necessary to burn the European flag to heat up? (Tribune) COMMENTS

Tribune signed Michel Gay.

The retail prices of gas and electricity will soar in the countries of the European Union (EU). In France, the 12.6% increase in regulated natural gas sales tariffs (TRVG) on October ¹ , 2021 affects around 3 million “residential consumers”.

Gas had already increased in 2021 by 8.7% on September 1, by more than 5% in August, and almost 10% in July. These successive increases are one of the harmful consequences of the crazy “green” energy policy of the EU. They have reached nearly 50% since January 1, 2020!

Europeans are blandly beginning to discover the first financial consequences of this ruinous "green" energy orientation based on intermittent wind and sun: the price of natural gas is exploding in the EU and has just reached a historic peak on 20 September at 79 euros per megawatt-hour MWh) an increase of 30% in one week.

The price of electricity (mainly produced by gas in Europe) will follow suit.

However, residential consumers with fixed-price contracts over several years (around half of customers) are not affected by this increase in the short term. They will pay the increase… later.

Why this historic increase?

This increase of unprecedented magnitude is observed in all European countries. It could be explained by a limited supply in Europe, by storage levels at their lowest for years, by the moderation of Russian exports due to the fire this summer of one of the two gas pipelines importing Russian gas to the EU, and by "the global economic recovery observed for several months" according to the Electricity Regulatory Commission (CRE).

The commissioning of the Nord Stream 2 gas pipeline should make it possible to supply more gas from 2022 and limit the rise, but for the time being gas prices in Europe will remain high throughout the winter.

Aid for low-income households

A gas-heated household spends an average of 1,500 euros including tax per year, according to the CRE.

In France, the UFC-Que Choisir association estimates that electricity prices could still jump by 10% at the start of 2022, i.e. “an average increase of 150 euros on the annual electricity bill of a household. using it for heating.

In order to try to compensate for this price increase, the government announced in mid-September the payment in December of exceptional and derisory aid of 100 euros for nearly 6 million low-income households.

Politicians are starting to tremble, because the population (yellow vests?) might not accept this disastrous upward drift.

In Spain, a new package of measures aimed at lowering electricity bills, ranging from a reduction in the special electricity tax to a temporary reduction in the remuneration received by non-CO2 emitting power stations has was approved on September 15.

Italy is considering allowing funds from its envelope earmarked for the European Covid recovery plan to be used to help families who are having difficulty paying their energy bills.

electricity

Regulated electricity sales tariffs are revised twice a year. In 2021, they increased by 1.6% in February, then by 0.48% in August. But prices are currently soaring on the wholesale markets, raising fears of a sharp rise in regulated prices in February 2022.

Even if France mainly produces (75%) its electricity with its nuclear power plants, its price is established from the cost of starting up the last means of electricity production called upon to satisfy demand. And the latter most often runs on gas.

Finally, the price of electricity is also influenced by the rise in the price of CO2 emission quotas, which must be purchased by those who consume fossil fuels such as gas.

The more stringent the European Union's climate commitments are, the more these quotas are sold… and the more the price of electricity rises.

While the person in charge of the CO2 price at the European Commission declared that she would work to stop this increase, the vice-president in charge of "saving the planet" (Timmermans) was delighted that energy or be expensive to force people to change their behavior…

What's happening ?

Today, the demand for gas is strong in Asia and in particular in China whose objective is to dominate the world by 2050 thanks to its economic development which requires an increase in energy consumption (fossil and nuclear) plentiful and inexpensive. LNG carriers are therefore more attracted to Asia than to the EU, but this is only a normal and marginal operation of the market.

However, the price of natural gas delivered by some LNG tankers in China or Korea can vary without influencing the price of Russian, Algerian or Norwegian gas sold in the EU.

Indeed, the vast majority of the market is governed by long-term contracts with a fixed price. There is no reason for energy prices to skyrocket because of price increases on marginal quantities in Asia.

And yet, this high price on small quantities of distant gas has repercussions in Europe by benefiting professional speculators on the backs of consumers asked to pay or to... restrict themselves, which must please the EU vice-president in charge. to “save the planet”.

Soaring gas and electricity prices are therefore not technically justified. Speculators know how to identify the right opportunity to enrich themselves at the expense of consumers. All this little world of businessmen wins, including the States which recover with one hand via taxes what they give back in part with the other. Only the poor taxpayer-consumer citizen, who no longer understands anything, has to pay!

For its part, the EU is naively moving towards scarce and expensive wind and solar energy... whose futility in "saving the planet" is revealed a little more each day by being unable to replace gas and nuclear at because of its intermittent and variable nature, known to all…

This random renewable energy will remain marginal (currently 2.5% of primary EU demand).

The 1000 billion euros poured out by the EU for almost 50 years, and the three European directives imposing priority purchase of their production will not change anything.

Return of the yellow vests?

Gas and electricity bills will rise without any impact on global CO2 emissions because of this crazy European "energy transition" to gas, supported by Germany, based on so-called wind and solar energy free but in reality expensive because diffuse, imported, randomly variable and intermittent.

Faced with the incompetence and ideological dogmatism of the leaders of the EU countries in the energy field, will the Europeans and the yellow vests in France have to burn starry blue flags in rage to warm up?

Technical APPENDIX

The note “Evolution of the controllable powers of the controllable powers installed in France and Germany since 2005” indicates that these two countries have lost more than 34 gigawatts (GW) of controllable power since 2005, which is considerable.

This loss is due both to the opening towards pseudo-competition of the electricity markets, but also to the "intoxication" of decision-makers by the forecasts of the Energiewende in Germany and the ADEME in France ( influenced by the anti-nuclear association Négawatt) which globally resulted in a drop in electricity consumption of 40% in France and 45% in Germany between 2010 and 2020.

These two forecasts went against all logic when carbon neutrality required, on the contrary, a replacement of fossil fuels by carbon-free electricity, so that electricity consumption would increase by 2050, and not decrease, as The Sauvons le climat association has indicated this for several years in its Négatep scenario.

In reality, the German and French anti-nuclear wanted to prove that it was easy to get out of nuclear power easily and switch to 100% intermittent renewable energy (EnRI).

By dint of beautiful absurd demonstrations, they have abused the public authorities who have programmed reductions in controllable means with confusing naivety, whereas for 10 years (all the same) electricity consumption has not decreased in Germany and France.

On the contrary, carbon neutrality will require the replacement of fossil fuels with carbon-free electricity.

The Germans, who showed a drop in electricity consumption from 637 TWh to 350 TWh in 2050, are now announcing that consumption of more than 1000 TWh must be targeted and, in France, the Academy of Sciences is announcing around 900 TWh in 2050.

The German and French public authorities were deceived by adopting the crazy multiannual energy program (PPE) in 2020.

France has lost the essential margins to pass the peaks of consumption while ruining itself with intermittent electricity which assumes no service to the electrical system, nor any responsibility in the supply-demand balance.

The increase in prices on the “spot” market is totally indicative of this situation. Buyers on "the spot" are electricians who have to deal with a failure of a means of production, or else resellers who ensure only 95% of their sales by purchase contract and end up with purchases on the spot.

From now on, the quantities available on this “spot” market are increasingly low. Result: prices soar.

And the worst is yet to come since the Germans are going to shut down nearly 3 GW of nuclear power and 7 GW of coal-lignite power plants.

In summary, prices are rising due to a lack of controllable means in Europe and load shedding (power cuts) is approaching.

European states should come to terms with the facts and urgently decide to build controllable means… using gas.

For France, the PPE is to be buried and the shutdowns of nuclear units are no longer relevant. It will be necessary to launch both the EPR2 and gas-fired power plants that are faster to build, and therefore return to carbon neutrality beyond 2050.

This is how ideologues are bringing France and all of Europe into the wall both for the maintenance of the electrical balance and for the objective of carbon neutrality.

The public tariff does not depend on the price of gas, but alternative suppliers buy part of their electricity on the market. If market prices go up, their costs go up and they have to pass that on to their customers.

Alternative suppliers are producers from gas-fired power plants (such as ENGIE or Total Energies) and/or resellers of nuclear electricity purchased from EDF through Regulated Access to Nuclear Electricity (ARENH). They are therefore hit by the rise in gas prices but can moderate their electricity prices thanks to ARENH.

Those who are only resellers of electricity purchased on the ARENH, it's happiness, they align their electricity price with those of ENGIE and Total energies, and they earn more than before!

For them to be competitive, CRE will increase the regulated sales tariffs (TRV) by around 10 to 12% in February 2022 because the "spot" market prices should increase as the surpluses by electricians on the market will approach zero.

CRE will therefore increase the regulated tariff so that the (pseudo) “alternative producers” are competitive. Thus, when spot prices are low, alternatives can sell below the regulated price, and when spot prices are high, the regulated price increases so as not to penalize them.

After 10 years of ARENH, the alternatives have not developed any new means of production.

However, this was the objective of the Champsaur Commission, subsequently taken up in the NOME law. This provision ruins EDF and does nothing in terms of real competition.

The worst is that intermittent electricity has immobilized a large part of the capital necessary for the construction of controllable means of production.

And the consumer always loses.

At the end of 2021, the sum of the controllable powers in France and Germany is 178 GW, not counting the loss of 10 GW between nuclear and thermal in Germany.

The peak power demand in Germany is 82 GW and in France 100 GW.

But not all the means that can be mobilized are available at the same time. France this winter will not be able to count on more than 80 GW.

Those who claim that Europe can still shut down 48 GW are misleading policy makers, as they have been doing for 10 years. In reality, they reason in annual energy. However, all professional electricians know that a fleet adapted to energy is under-adapted to the peak due to a lack of storage.

EVOLUTION OF CONTROLLED POWER INSTALLED IN FRANCE AND GERMANY between 2005 and 2020

2005

TOTAL 2005 FRANCE + GERMANY = 212,557 MW

2021

TOTAL 2020 FRANCE + GERMANY = 177,907 MW

DECREASE 2020-2005 = 34,650 MW

Germany will lose 10 GW (6 GW thermal and 4 GW nuclear) between 2021 and 2022

Spain and Italy are structurally in deficit like Belgium and the United Kingdom which are almost always importers, as well as Poland, Romania and Turkey.

If instead of giving pride of place to energy ideologues, the government relied on real professionals, it would avoid a lot of nonsense, and above all serious energy supply concerns for the French tomorrow.

EU countries have an incoherent energy policy that leads to impoverishment and serious social and human problems.

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