We are all affected by soaring energy prices. Several factors are linked to this, but which ones? Adel El Gammal and Bruno Colmant gave us some explanations.
The price of electricity has been breaking records for several months, but how can this be explained? Its price, in fact, is closely linked to the price of gas. Economist Bruno Colmant enlightens us: “It is the last unit of electricity produced by a gas plant that will determine the wholesale price of all electricity in Europe. If the demand is too strong compared to the conditions of production, it is the gas which determines the price of electricity“.
Now, according to Adel El Gammal, expert in geopolitics at the ULB, there is an anomaly: “All electricity producers who do not produce from gas benefit from electricity. There are therefore enormous profits, called ‘win for profits’, which are anomalies which clearly show that the market model is not operating in these circumstances.“, explains the expert.
A geopolitical context
In recent days, in addition to the lack of Russian gas, the markets have been worried regarding the lack of French electricity. Our neighbors have announced to us the prolonged closure of four nuclear reactors. Of the 56 reactors installed in the country, only 24 are in operation today.
These events aggravate a precarious energy situation in Europe: “We have under-invested in fossil energy infrastructures in recent years, but not sufficiently rapidly invested in renewable energies, which must replace fossil energies. There is structurally a deficit in the quantity of energy compared to market demand at the global level“, says Adel El Gammal.
What solutions?
Consequence: energy prices soar, to the point of imagining rationing this winter: “This means that some businesses might not have access to electricity for a certain period of time.“, explains Bruno Colmant. “In Belgium, in extreme cases, load shedding plans are devised. We keep, for example, electricity for hospitals, but not for other sectors. It is a quantity of electrons which is refused on request by the public authorities“. According to the economist, this is an imaginable situation in the event of a worsening of the situation.
For our experts, there is only one solution: drastically reduce our energy consumption. It is a way of reducing the cost of our bill and acting on demand, and therefore on the final price of gas and electricity.
