"Heat" for 30 thousand rubles. How the Europeans are paying for the energy transition

Sergey Kondratiev, Deputy Head of the Economic Department of the Institute for Energy and Finance, commented to Gazeta.Ru on the dynamics of electricity prices in Europe.

What will happen to prices in 2022

According to Sergey Kondratiev there are no prerequisites for a decrease in exchange quotations for gas and oil at the moment. The slowdown in the certification of Nord Stream 2, the launch of which would help the Europeans to fill the fuel deficit, has a negative effect on wholesale electricity prices in the EU.

“Even €100-120 per MWh will still be three to four times higher than the optimal wholesale electricity prices. This situation will become an energy shock for end consumers and industrial enterprises, the growth in the number of bankruptcies of which will continue in 2022,” the expert emphasized.

At the same time, he added, the possible recognition of the "green" status for nuclear and gas generation could greatly help bring down wholesale electricity prices. This will become possible if the cost of quotas for greenhouse gas emissions (CO2) is reduced.

According to analysts at Citigroup Inc., in 2022, European countries will face the largest electricity bills in a decade. Taking into account the current average wholesale prices, the total spending of the EU countries by the end of December will amount to about $1 trillion.

According to Kondratiev, end-users in Western Europe will be able to bear such high costs only through state subsidies. The poorer states of the Eastern region will have to regulate electricity tariffs or introduce restrictions on the use of "heat". Otherwise, Poland and the Baltic countries will face mass social protests, the expert concluded.