27th Mar 2023

Europe burned more gas for power despite crunch

  • The Tignes Dam on the Isère in the Rhône-Alpes region in France (Photo: European Roads)
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Europe has burned more gas for power generation during the first seven months of 2022 than during the same period last year — despite pledges by EU member states to reduce gas use by 15 percent.

The findings were presented on Thursday (1 September) by Rystad Energy.

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Gas-use was up 4.28 percent for the generation of electricity, which translates to 13.2 terawatts. Coal made an even bigger jump, with 11.9 percent, or 27.9 terawatts of electricity.

Europe is "suffering from a hydro and nuclear power crisis," CEO and founder Jarand Rystad said.

Supply in both is down by 20.8 percent and 11.8 percent respectively this year, which translates to 110 terawatt hours of electricity, roughly equivalent to the total loss of electricity caused by lower Russian gas supplies.

Hydro power, which provides 16 percent of European electricity, was especially hard-hit. As temperatures soared in the summer months, hydro plants had to divert water or shut down completely.

In France, Europe's largest producer, hydro power generated 27 percent less electricity. In Italy and Spain supply was 40 and 44 percent down.

Nuclear power plants were also forced to shut down because water flow in rivers, normally used to cool reactors, was too low. This has contributed to a 57-percent drop in nuclear power output in France.

To make up for this, gas and coal are increasingly being used for power generation.

But it comes at a challenging time.

In July energy ministers agreed to voluntarily reduce gas use by 15 percent as part of a package of measures meant to prevent a gas crunch this winter.

According to Rystad figures, Russian state-owned gas company Gazprom has reduced gas flows to Europe from 350 million cubic metres a day (mcm) in August last year down to 50mcm now– which translates to a year-on-year drop of roughly 85 percent.

This has led to an historic price rally in recent weeks, with Dutch benchmark prices for gas reaching a record €346 per megawatt-hour on 26 August, although since then prices have come down.

High prices have already forced some businesses and industrial producers to shut down.

Cited by the Financial Times on Thursday, Siegfried Russwurm, head of the main German business lobby, the BDI, said industrial gas consumption in Europe had declined 21 percent in July compared to a year ago.

"Industry is suffering because they cannot get gas," Rystad said, a situation likely made worse if gas energy companies burn gas to generate electricity.

"We have seen blackouts in China, so they are also suffering from this," he said, adding that burning gas for power drives up prices around the globe.

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