Prof. ST Hsieh
Director, US-China Energy Industry Forum
August 8, 2022
The following reports and analysis reveal one principle: it is difficult to share pains with others so, when time is really tough “each tub is on its own bottom.” It is surprising that no one cares the root cause of this energy crisis in Europe is the war in Ukraine, but it sounds that Europe will keep the Ukraine war going for ever and ever. Is there anyone in Europe interested in a cease fire that may restore some normalcy including a stable energy supply and demand market?
Secondly, mother nature calls all the shots. “After a dry spring in Norway, hydro reservoirs in the worst impacted area stand at 49.3%, compared with a median of 74.9% for the 2000-19 period” which prompted Norway moves to limit power export. It seems that the Germans should wish for a very mild winter this year. Good luck!
Government of Spain makes the most noble policy decision: Starting on Aug. 9 and lasting through November 2023, commercial buildings will have to keep summer air conditioning above 80 degrees — matching a policy in place at public buildings — and winter heating below 66 degrees Fahrenheit (19 degrees Celsius).
But one wonders why the energy saving measure should end by November 2023. It should last forever and save the earth from global warming!
The last article is very alarming for Europe, because everyone there is screwed by this man-made energy crisis: every nation is looser. Of course, US always comes on top, specifically in this case the LNG industry. Further, the conclusion that “the crisis won’t last beyond this winter” is not realistic. Because “Europe will take years to build the LNG infrastructure to “fully replace” Russian pipeline gas supply.
Let us pray that the war in Ukraine will end soon.
Norway Moves to Limit Power Exports in Blow to Europe
Lars Paulsson and Stephen Treloar Mon, August 8, 2022 at 7:53 AM
(Bloomberg) — Norway is gearing up to limit power exports, an early sign of the tests Europe’s cross-border solidarity will face this winter as the energy crunch deepens.
Refilling reservoirs will be prioritized over power production when levels fall below seasonal averages, Energy Minister Terje Aasland said Monday. The country is one of Europe’s top exporters of electricity, sending about a fifth of its output to its neighbors but low water levels in southern Norway mean the government says it needs to act now to prevent domestic shortages this winter.
As Europe’s energy crisis worsens, any restriction would be yet another blow for nations on the continent who rely on cheap Norwegian hydropower to help keep the lights on. The UK is among the nations most dependent on Norwegian exports, and any limitations would raise already elevated prices and may force National Grid Plc to utilize its strategic reserve of coal generation, Aurora Energy Research said in a note.
Aasland and Prime Minister Jonas Gahr Store met with parliamentary leaders on Monday morning to brief them on the power market situation and parliament may be called back from its summer break to address the issue. The energy minister also confirmed that an increase to a program to help consumers and farmers cover soaring power costs will be brought forward a month to Sept. 1.
Norway isn’t a European Union member, but is part of Europe’s single energy market and its rules state that countries aren’t allowed to curb flows to neighbors for prolonged periods. Cuts would only be allowed if an emergency situation is declared. And the lobby group for the nation’s utilities said any potential curbs to Norwegian electricity exports need to follow EU power-market rules.
“If there is something that we do not need in a difficult time it is to undermine the cooperation and the predictability of power trade and flow that the European energy transition depends on, or Norway’s commitment to that cooperation and rules of exchange,” Toini Lovseth, executive director of markets and customers at industry group EnergiNorge, said by email before the minister’s statement.
Norway Mulls Curbing Electricity Exports to Avoid Shortages
Norway gets almost all of its electricity from its vast hydro resources. Historically, it has been able to export a hefty surplus and still have among the lowest prices in Europe. But after a dry spring, hydro reservoirs in the worst impacted area stand at 49.3%, compared with a median of 74.9% for the 2000-19 period.
Norway now has more water in the reservoirs than the authorities’ earlier forecasts indicated for the beginning of autumn, Aasland said. The probability of needing electricity rationing in the winter is “low,” he added, citing forecasts from regulator NVE.
Utilities benefit from selling electricity abroad, especially when prices are as high and volatile as they are now. The nation’s biggest power producer, Statkraft AS, supports “a well-functioning market system for power where Norway can import power in dry years and export power when we have a power surplus,” it said by email, declining to comment further on any potential curbs.
Spain Air Conditioning Crackdown Set to Take Effect
Thomas Gualtieri and Alonso Soto Mon, August 8, 2022 at 8:43 AM
(Bloomberg) — Escaping the sweltering heat baking much of Spain just got a little bit harder. The government last week declared that businesses will not be allowed to run their air conditioning below 80 degrees Fahrenheit (27 degrees Celsius), part of a broader effort to save energy as Europe contends with record heat and races to cut its dependence on Russian gas.
Starting on Aug. 9 and lasting through November 2023, commercial buildings will have to keep summer air conditioning above 80 degrees — matching a policy in place at public buildings — and winter heating below 66 degrees Fahrenheit (19 degrees Celsius). The new rules apply to theaters, cinemas, museums, restaurants and shopping malls, while kindergartens, hospitals, schools and universities are off the hook. So are gyms, hair salons and laundries.
Beyond temperature, the new rules also mandate turning off the lights of shop windows after 10 p.m., and no longer illuminating monuments at night.
Spain is one of many European Union countries looking for ways to cut down on energy use as part of an agreement aimed at reducing the bloc’s consumption of Russian gas. The Mediterranean country, which relies less on Russia than some of its fellow EU countries, secured an exemption to reduce its consumption by 7%, less than half the 15% agreed on by the union last month.
Meanwhile, demand for air conditioners and fans has skyrocketed after a string of sizzling heat waves pushed temperatures above 100 degrees Fahrenheit across large swathes of Spain, including the capital Madrid. The extreme heat even prompted some supermarkets to limit the sale of ice.
The fallout from Europe’s energy crisis
Harold Maass, Contributing editor Mon, August 8, 2022 at 2:55 AM
The European Union has called on members of the trading bloc to slash their use of natural gas as Russia cuts deliveries. European wholesale natural-gas prices jumped last week when Russia announced the reduction of flows through the Nord Stream 1 pipeline, which carries natural gas from Russia to Germany and is now down to 20 percent of normal capacity. Energy experts warn that a brutal heat wave, a hydropower shortage, and corrosion issues at French nuclear reactors are contributing to the continent’s worsening energy crisis, according to The Wall Street Journal.
European leaders have accused the Kremlin of blackmailing them as punishment for supporting Ukraine’s resistance to Russia’s invasion. They are scrambling to find alternative fuel sources before winter and trying to reduce demand to help them stockpile fuel before cold weather hits.
European voters might pick leaders less supportive of Ukraine
Moscow’s “ultimate aim is to bring governments to power in Europe that aren’t committed to supporting Ukraine and thus fracture the Western coalition,” say Daniel Yergin and Michael Stoppard in The Wall Street Journal. And it just might work. ”
Either way, Germany loses
One outcome is certain as all of Europe struggles to contend with Russia’s restriction of gas flows to Germany, says Maria Tedeo at Bloomberg. “Europe’s era of ‘Germany knows best’ is ending.”
France’s approach to Russia looks bad, too
“If Germany erred by failing to see the geopolitical risk posed by its reliance on cheap Russian gas,” says The Economist, “France’s mistake was to think right up until the eve of war that it could sweet-talk [Russian President Vladimir] Putin into better behavior.”
Europe brought this on itself
“It is ridiculous to expect Russia to keep providing a stable supply of natural gas to the countries that are imposing crippling sanctions on it,” says China Daily, an English-language Chinese state media outlet, in an editorial. “That means the U.S.-led sanctions, which are fundamentally contradictory to the needs to build a lasting, sustainable, and balanced security mechanism in Europe, are also overdrawing on the future development prospects of the world.” If this causes division in Europe, it’s not Russia’s fault. The U.S. did this by “misleading the EU into believing that binding itself to the U.S. is the only way it can ensure its security.”
Russia caused this crisis, and might regret it
For now, Putin is keeping some gas flowing, to cash in on the high prices, but a full cutoff is so likely that “Germany may temporarily reverse its decision to phase out nuclear power.” But the crisis won’t last beyond this winter. When it’s over, Europe will have new natural-gas sources, and Russia will no longer be considered a reliable supplier. Then, Moscow will have to find new buyers in Asia, but it will take years to build the infrastructure to “fully replace the market it lost in Europe.”