Although wholesale electricity and gas prices have fallen considerably since the end of 2022, they are still twice as high as their historical levels, according to the European Commission in a report published on Friday 5 April on the development of energy prices and costs in the EU between 2010 and the beginning of 2023.
“The impact of higher prices on energy bills, particularly for the most vulnerable households and businesses, is still considerable”, says the report.
The average retail price of electricity in the EU has risen by 9% (+€19/MWh) to reach €235/MWh between 2020 and 2021. In the first half of 2022, prices rose to 310 euros/MWh (+32%), and in the second half of 2022 to €371/MWh (+20%). In the first half of 2023, following the fall in wholesale markets, retail prices fell back to €310/MWh (-16%).
Average retail gas prices for EU households have risen from €68/MWh in 2021 to €143/MWh in January 2023.
“The impact on the entire EU economy has also been substantial, with a significant increase in the EU’s fossil fuel import bill, mainly driven by soaring gas and oil prices”, says the Commission.
The outlook for 2024 is more optimistic, but the reduction in Russian pipeline gas supplies to Europe has led to tensions on world gas markets that are likely to persist until new LNG (liquefied natural gas) liquefaction capacity comes on stream from 2025.
Certain risks may also materialise in 2024, such as a strong rebound in Asian demand, extreme weather conditions, further cuts in gas imports from Russia and armed conflicts in the Middle East and elsewhere.
The report states as well that LNG now accounts for 40% of the EU’s gas supply, and that renewable gases should be increasingly used in the future to support the EU’s decarbonisation efforts.
To avoid crises, the EU is counting on the widespread adoption of low-carbon and renewable technologies, energy efficiency measures and increased electrification rates in heating and transport.
To see the report: https://aeur.eu/f/bnr (Original version in French by Pauline Denys)