Expert Warns of Possible Energy Crisis and Sharp Increase in Gas and Electricity Prices in Europe

Lack of natural gas, cold weather and uncertainty of future supply. According to experts, these are precisely the variables that could be behind further sharp increases in gas and electricity prices on the markets. As a result, this could be manifested by the arrival of another energy crisis, which cost households thousands to tens of thousands of crowns just for the last heating season. The prices of some commodities could, according to experts
increase up to three timesthe price increase of some of them has already started.

On Friday alone, the price of gas for the European market increased by almost a fifth and returned above the threshold of 30 euros (almost CZK 710) per MWh. But gas did not become more expensive only on Friday, a smaller price increase on the market took place throughout the week, increasing the price of the commodity by 35 percent.

The main reason why the price increases is supply uncertainty before the upcoming heating season. According to Bloomberg, traders are concerned about insufficient supplies of liquefied natural gas (LNG) to Europe. However, the European Union relies heavily on LNG after the cessation of natural gas supplies from Russia. Fluctuations in these supplies thus strongly influence the price of gas for Europe.

Although there was a drop in gas prices in previous months, mainly as a result of optimism and sufficiently filled reservoirs after the winter, the situation could change very quickly. Although, for example, according to the data of the site zasobyplynu.cz domestic reservoirs are filled to approximately 73.77 percent, the arrival of cold weather at the beginning of the heating season could thin out stocks very quickly. The Czech Republic, like other EU countries, would then rely on gas supplies from LNG terminals, whose capacities are not infinite. The price of gas would probably rise very quickly and with it the price of electricity.

According to experts, with the start of the next heating season, the price of gas could increase up to three times the current prices. Although energy companies have implemented measures that should prevent rapid price increases for end customers, a rapid increase in prices would force many of them to raise prices significantly again after a short-term discount.

According to Pavel Urubek, CEO of MJEnergie, which is an external energy seller for companies in the Czech Republic, companies and public administration should start preparing for the approaching heating season. Many of them currently use energy from spot market. It is true that the price for energy is currently very favorable, but companies have no certainty that this will be the case in the coming months. If, according to Urubek, companies or municipalities will be able to use contracts with fixation for the next year under CZK 1,500 per megawatt hour, they should not hesitate too much before concluding it.

However, the sharp increase in energy prices and the arrival of another energy crisis will probably once again support domestic households and companies in faster
investments in renewable resources. For example, the owners of photovoltaic power plants could partially benefit from the market situation. Higher energy prices are likely to remain even with the arrival of the spring months of next year, when production from photovoltaic power plants increases and households or companies with photovoltaics will, as a result, reduce the amount of expensive energy taken from the distribution network.