Green sprouts: energy of all kinds will remain expensive in 2022

Marcel Salikhov, President of the Institute for Energy and Finance, commented to Izvestia on the dynamics of world energy prices in 2022.

Gas: a year of records

There are serious reasons to believe that the gas crisis in the EU, and indeed in the entire world market, will continue next year. Prices may turn out to be high even if Nord Stream 2 is put into operation, Marcel Salikhov believes.

— I think that a fairly high level of prices in the European market will continue next year. Even under a rather optimistic weather scenario, by the end of March, gas volumes in European UGSFs will drop to their minimum. This means that a sufficiently high level of prices will be required in order to ensure the restoration of stocks, Salikhov notes. — Gas production in Russia is currently close to the potential level, over the next year the level of potential production will not be changed. The commissioning of a new large field - Kharasaveyskoye in Yamal - is scheduled for 2023. The launch of NS-2 will reduce tension in the European market, but will not fundamentally change the market situation. The main restrictions are related to the lack of supply and capacity in gas production, and not in gas transportation.

As Marcel Salikhov said, at current prices for raw materials, transport and other production costs, the investment cost of wind and solar generation has increased by at least 25%, and in some cases the increase in cost may be even higher.

- However, rising prices for traditional energy carriers increase the competitiveness of renewable energy due to rising electricity prices. So far, rising costs have not had a strong impact on plans to commission renewable energy facilities next year. The main countries did not change their policy to support RES or cancel auctions for RES capacity due to rising costs. For them, the cost of financing is a more important factor. But in the longer term, if commodity prices remain high, as does inflation, and interest rates in major currencies rise, this will seriously slow down the momentum for wind and solar energy.