Electricity Prices Skyrocket in Greece, Europe as Winter Sets In

Greece and the rest of Europe are facing an energy crisis with electricity prices skyrocketing to new records on Wednesday as winter sets in.

According to the European platform EEX, wholesale prices of electricity at over 400 euros ($450) per MWh for France, Germany, Netherlands, Belgium, Switzerland, Austria, Slovenia, Croatia, Hungary, Italy and Slovakia.

For Greece, the price stands at 415 euros, among the lowest among countries covered by the Energy Live platform.

Electricity prices “have gone beyond the unthinkable”

“Energy prices have gone beyond the unthinkable,” Greek Minister for Development and Investment, Adonis Georgiadis tweeted on Wednesday.

“The geopolitical game with natural gas is leading the EU economy into a crisis. Greece does not have the most expensive prices, but at this height, it matters little. Coordinated action is needed,” Georgiadis added.

Natural gas is the primary contributor to a surge in electricity prices. It is estimated that around 80% of the increase is attributed to gas. European gas “continued its inexorable rise… to another record,” wrote Deutsche Bank analysts in a client note earlier in the week.

“It comes as temperatures have continued to decline heading into the European winter, and we also got the news that [Russian energy giant] Gazprom had not booked any extra capacity in January for gas flowing through Ukraine.”

Some analysts blame the market spike on ongoing controversy surrounding Russia’s planned Nord Stream 2 gas pipeline. German Economic Affairs Minister Robert Habeck warned Saturday of “severe consequences” for the Nord Stream 2 gas pipeline from Russia to Germany if Moscow attacked Ukraine.

The Baltic Sea pipeline is set to double supplies of cheap natural gas from Russia to Germany, which the European Union’s top economy says is needed to help it transition from coal and nuclear energy.

But the 10-billion-euro ($12 billion) project has for years been dogged by delays and drawn fierce criticism from both Germany’s eastern EU allies like Poland and the United States.

Critics say Nord Stream 2 will increase Europe’s dependence on Russian gas and Ukraine has described it as a “geopolitical weapon.” One-third of Europe’s total gas supplies come from Russia.

Energy crisis needs “European solution”

Higher energy prices threaten to derail Europe’s economic recovery just as the coronavirus omicron variety is spreading. European governments are trying to mitigate the crisis by adopting a variety of measures to help consumers.

Greek PM Kyriakos Mitsotakis said recently that price hikes in energy costs for consumers are a European problem, therefore it requires a European solution.

The Greek premier noted that “we requested that the European Commission evaluate the energy market the soonest possible, so as to suggest solutions against these sudden fluctuations in energy prices.”

Moreover, the Greek government has already proposed that natural gas storage be increased, and it has also put forth the idea for collective purchasing of natural gas, to increase the bargaining advantage against gas suppliers, he added.

Greece adopts relief measures for electricity, gas bills

But there is no common EU response to the problem. At the recent EU Summit in Brussels leaders failed to agree on common language on energy issues, forcing the topic to be dropped from the Council conclusions.

Greek PM Kyriakos Mitsotakis and other leaders pressed for a common response to the energy crisis, but to no avail. “We will again ask the European Commission to consider all options so that possible interventions can be made at the European level in order to curb rising gas prices,” Mitsotakis has said arriving at the summit.

“There is not a secret that there were different opinions around the table,” Charles Michel, the European Council president, said after the summit.

Greece announced three new relief measures on Monday: An additional increase in state subsidies for electricity bills for December, a further 40 percent reduction in natural gas bills for the month of December, and the subsidization of the biggest portion of recalculated agricultural energy tariffs from the months of August to December.