"There is no an alternative": will social payments help to cope with the energy crisis in the EU

Sergey Kondratiev, Deputy Head of the Economic Department of the Institute for Energy and Finance, commented to Gazeta.ru on the possibility of paying targeted subsidies to consumers in the EU countries to compensate for the increased costs of purchasing energy resources.

Sergei Kondratiev, a senior expert at the Institute for Energy and Finance, noted in a conversation with Gazeta.Ru, that electricity prices in the European Union began to show growth in August, when the rise in gas spot prices was not so noticeable. The leaders were countries such as Cyprus (+ 33.7% YoY), Belgium (+ 28.7%), Spain (+ 27.3%) and Italy (+ 23.1%). Taking into account the record growth of the exchange prices for gas already in October-November, the retail price for electricity in the EU will be 40-50% higher than last year's level. And this, in turn, could lead to serious social tension within the European Union in winter, Kondratiev warned.

In his opinion, the countries with the most liberalized markets and heavily dependent on gas imports will experience the greatest increase in electricity prices.

Poland - in plus, Germany - in negative territory

At the same time, countries with a diversified fuel balance, which are less dependent on energy imports, including gas supplies, will be the most protected from the crisis of rising prices for housing and communal services. Currently, the cost of electricity is at the lowest levels in Sweden with a large share of nuclear and hydropower, as well as in Poland with a high level of coal generation.

“However, Warsaw is now suffering from an equally important problem - the EU's daily half-million (€ 500,000) fines for carbon dioxide emissions from the Turow coal mine. There are claims from the EC and the neighboring Czech Republic. However, reliance on its own coal mining allows Poland to protect itself from rising electricity prices. The Netherlands can also benefit in the field of housing and communal services,” Kondratiev concluded.

Germany, despite the increase in coal generation, will become a kind of exception to the rule, faced with an increase in prices for housing and communal services (+ 20%). This is due to the fact that Berlin imports most of the coal, the exchange value of which is currently at an all-time high. In turn, if the prices for energy resources continue to grow steadily throughout the entire heating period, then in the coming months Europeans will expect a multiple increase in the cost of electricity, the expert summed up.

According to Sergey Kondratiev, the volume of energy payments throughout the European Union should amount to several billion euros in subsidies, which is not a critical burden on the aggregate budget of the countries. At the same time, the rules for granting subsidies will be very flexible, involving a refund from the EU authorities.

“Large companies conduct their business mainly on credit funds. This means that tariff restrictions will automatically lead to a blow to the banking sector and an increase in the number of refusals by gas supply companies like E.ON to conclude new contracts. Freezing tariffs in the current crisis conditions is simply impossible,” Kondratyev explained.