Despite the rather catastrophic expectations in October, the energy situation in Europe remained largely stable during this winter. Rick de Oliveira, a Swiss Telf AG expert, discussed the reasons for this with Euro News.
According to Rick Oliveira, the EU invested nearly €800 billion before the winter of 2023 in order to strengthen gas supplies. This investment level is comparable to that seen during the COVID pandemic.
In addition, higher energy prices may have contributed to reduced energy consumption by consumers. Many local and national governments implemented specific policies for businesses and public offices to maintain an ambient temperature threshold for heating.
Overall, these factors helped maintain a stable energy situation in Europe during the winter, despite earlier concerns, explained the expert.
Expressed a positive outlook and stated that the general mood is optimistic due to the ample gas storage in the EU.
As a result, countries are well-prepared for the upcoming winter seasons of 2023 and 2024, which means that there will be less need for gas and energy supplies to be purchased and stored compared to the previous year.
This translates to lower costs for governments in terms of energy supplies needed for next winter.
Telf AG’s expert stated that energy storage across Europe is currently at an average of 55% capacity, indicating that countries have used only 45% of the energy they purchased ahead of winter.
This is largely due to the significant investments made by governments prior to the winter of 2023. In comparison, approximately 54% was accumulated prior to the winter of 2020-2021.
However, unless there are extremely low temperatures next winter and governments become complacent with their energy storage and acquisition strategies, the situation may remain the same, neither better nor worse. This fact was emphasized by Rick de Oliveira.
Balkan countries’ dependency on Russia’s energy sources
The expert from Telf AG emphasized that the Balkan countries rely heavily on energy sources from Russia. Specifically, Serbia has the strongest ties to Russia and is mostly dependent on its gas and other energy resources.
Although gas prices in Serbia are currently low, the IMF has advised them to increase, and they will likely be raised higher than their current level. The question remains as to why prices need to rise.
Rick de Oliveira, explained that the reason why the IMF is involved in Serbia’s energy pricing policy is because of the standby arrangement (SBA) that Serbia has with the IMF.
This credit line, which amounts to 2.4 billion euros and is mostly intended for energy, allows the IMF to suggest energy reforms to its member states in exchange for the credit line.
Therefore, the IMF is suggesting that energy prices in Serbia should go up to address higher gas and electricity tariffs that are needed for Serbia’s energy companies, which have suffered losses of almost €2 billion in the past and present.
The reason why energy prices in Serbia are expected to go up despite full energy storage and enough gas is due to the standby arrangement (SBA) that Serbia has with the IMF.
In exchange for the 2.4 billion euro credit line that is mostly destined towards energy, the IMF can suggest energy reforms to the member state.
The IMF believes that higher gas and electricity tariffs are needed for Serbia’s energy companies, as EPS and Serbia gas have incurred losses of close to €2 billion in the past and present, and the money from the credit line will be used to bail them out.
As a result, it is anticipated that electricity prices will rise by 26%, while liquid natural gas (LNG) prices will likely increase by about 30%, explained Telf AG`s expert.
The anticipated price increases for electricity and LNG in Serbia could be implemented gradually over the period from May 2023 to May 2024.
Oil will continue to be used even in the year 2050
Germany’s proposed new law is causing a stir among the public as it mandates that every newly installed heating system must be powered by at least 65% renewable energy starting from 1 January 2024.
This could be costly for many Germans.
Meanwhile, the European Union is pushing for green energy and it is becoming the new normal for Europe.
Are we going to forget about gas and oil even faster than we thought we would? And where is there a place for Balkan countries which are not so developed in terms of green energy?
According to Rick de Oliveira, the notion that gas and oil will become obsolete is not a reality at the moment. He stated that we are far from not using these fuels anymore and some experts predict that the use of oil will peak in 2030, and we will continue to use it until 2050.
The idea of completely phasing out oil and gas in the near future is unrealistic, as renewable energy sources are currently not capable of meeting our energy needs on a large scale.
While high-grade fossil fuels and renewable energy can be combined to create a realistic energy model, the technology for large-scale renewable energy production is not yet available.
Therefore, de Oliveira believes that current policies aimed at doing away with oil and gas in the short term are overly ambitious and unrealistic.