By Our Swedish Correspondent.
The Nordic power system is a mixture of generation sources, where hydro, nuclear and wind power are the main sources. The Nordic region has many energy intensive industries and a large share of electricity heated houses. Therefore, the electricity consumption and the electricity’s share of total power use is higher than in the rest of the EU. Development of electricity consumption is highly influenced by the weather during the year, with lower electricity demand in the summer and increased consumption in wintertime. The Nordic countries have a higher share of renewable energy production compared to the rest of EU and approximately half of the electricity production is generated from hydropower.
So far so good, you might think as a Nordic consumer of electricity, but all of a sudden, we find ourselves in the midst of an EU wide energy crisis that could potentially become global. Why?
Inventories at European storage facilities are at historically low levels for this time of year. Pipeline flows from Russia and Norway have been limited. Calmer weather has reduced output from wind turbines while Europe’s aging nuclear plants are being phased out or are more prone to outages, making gas even more necessary. No wonder European gas prices surged by almost 500% in the past year and are trading at record $1000 (29 September) per thousand cubic metres. A change from $600 on 30 August and raised to $800 mid-September.
The spike has forced some fertilizer producers in Europe to reduce output, with more expected to follow, threatening to increase costs for farmers and potentially adding to global food inflation.
Even a normally cold winter in the Northern Hemisphere is expected to drive up natural gas prices further across much of the world. Amos Hochstein, the U.S. State Department’s senior adviser for energy security recently stated, “If the winter is actually cold, my concern is we will not have enough gas for use for heating in parts of Europe, it won’t only be a recessionary value, it will affect the ability to actually provide gas for heating. It touches everybody’s lives.”.
The skyrocketing prices for natural gas seem to offer a bounty of blessings to Russia, and they definitely look like creating a huge storm for Europe. With only around 72 percent of Europe’s needed-storage volume filled, Russia is likely to start the operation of Nord Stream 2 with some of the most unbeatable gas prices in the industry’s history.
Sweden produced 159 TWh (year 2020; hydropower 45%, nuclear energy 30%, wind power 17%) and the production of hydropower is highly dependent on the amount of precipitation in the form of rain and snow, which means that during a year with little precipitation, production decreases. Wind power is also very much dependent on weather pattern, which leaves us with nuclear energy as the only really stable source for energy.
Are we going to be affected? Yes, as all complex systems are interdependent, and energy is very much such a system, we will feel the impact of higher costs for electricity.
Let’s hope for a White Christmas…