Electricity prices in Europe have reached their highest levels on record. Cuts in Russian gas supplies will ripple through European energy networks and could have lasting effects on industry and households.
Electricity prices are largely influenced by the cost of natural gas, which has recovered to a four-month high in Europe as supplies from Russia dwindled, more than tripling from a year ago.
The situation is also exacerbated by a reduction in domestic power generation as many of France's nuclear power plants have had to suspend operations for technical reasons. Germany exported about 600,000 MWh of electricity to France in June, compared with 300,000 MWh of electricity imported from France in the same period last year, according to the Federal Network Agency. The UK exports to France the equivalent of 10% of its domestic electricity needs every day.
In addition, the Nord Stream pipeline between Russia and Germany was closed in July for scheduled maintenance, adding to concerns about gas supplies. Germany plans to restore up to 10 million kilowatts of coal-fired power, but analysis says record coal prices will limit ease in the electricity market.
On the other hand, zinc and aluminum smelters in Europe are facing enormous pressure from rising energy costs and falling prices. The industry has been "in trouble" since September 2021, and if electricity prices remain at such high levels, there may really be a need to worry about factories being shut down.
