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Depleted natural gas inventories and low wind speeds have led to a surge in electricity prices across Europe, putting pressure on governments as consumers protest against surging power bills ahead of the winter heating season.
Electricity prices from the UK to Spain have jumped to all-time highs, people in Spain have taken to the streets, while prices across Europe so high could become a drag on the economic recovery from the pandemic.
In Spain, day-ahead electricity prices surged to a fresh record this week, which is “a huge political problem,” says Javier Blas, Chief Energy Correspondent at Bloomberg News.
Consumers in Spain are protesting against utilities as households now pay around double the price for electricity compared to what they paid at this time last year, the New York Times reports.
Power prices hit this week records in the UK, Germany, and France, too.
In Ireland, typically an exporter of electricity to the UK, a second amber alert “due to a generation shortfall” was issued this week alone. The insufficient electricity supply on Thursday led to the suspension of the Moyle Interconnector, which exports electricity from Northern Ireland to Scotland across the Irish Sea.
In the UK, high natural gas prices and low wind speeds have created a perfect storm for the day-ahead power prices, which hit new records this week.
The UK, as well as the rest of Europe, are bracing for further spikes in power prices when the heating season begins. The natural gas levels in storage in Europe are significantly below normal because of a cold snap in the spring and surging prices of natural gas amid lower shipments from Gazprom and soaring prices for liquefied natural gas (LNG).
For European consumers, energy prices are a pain point, and this year’s surging prices feed into inflation and the cost of goods.
In Germany, Europe’s biggest economy, higher energy prices pushed the annual inflation to a 13-year high in August, as household energy, motor fuels, and food prices jumped. Spain also saw a jump in inflation to the highest in several years due to surging electricity prices.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com