Despite significantly calmer energy markets and much lower wholesale natural gas prices, Europe could still face price spikes this winter if a sudden shortage of supply coincides with colder-than-normal temperatures, according to one of Germany's top utility firms, E.ON.
"While intraday volatility remains high relative to the period before the energy crisis, significant price spikes comparable with August 2022 did not occur in the first half of 2023," E.ON said in its half-year results on Wednesday.
"The likelihood of a repetition of the crisis of last winter has gone down significantly, which can also be seen in the forward market," CEO Leonhard Birnbaum told Bloomberg Television in an interview.
"But we have to be clear that the structural change due to the Russian war in Ukraine and the drop out of Russian gas in the supply of Europe is going to stay and therefore the crisis is not over," he added.
The energy crisis is not over yet, and the situation with energy supply in Europe could deteriorate later this year, E.ON's chief financial officer Marc Spieker said at the Q1 results presentation in May.
Today, E.ON is more optimistic about this year and the coming winter compared to last year, and reported adjusted core earnings up by 40% in the first half of 2023 compared to the first half of 2022, which was "adversely impacted by the energy-industry environment."
"After a long period of crisis, we sense that the headwinds for our business are diminishing. We see our markets increasingly recover," Birnbaum said, stressing the importance of advancing the energy transition.
"The crisis has made us all aware that sustainability, supply security, and energy affordability always have to be considered together. Persistent government intervention and hasty reforms, such as those discussed in Europe and in many member states during the crisis, would do more harm than good," Birnbaum added.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More
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