.
Lack of wind in UK has forced reliance on natural gas and coal. Additionally, a strike in France has reduced exports to Britain along two interconnectors. A “limit on flows through the North Sea Link, that has been reduced to half capacity since Oct. 1, was extended to Thursday.”...Britain gets only 5% of its natural gas from Russia.
11/15/21, “U.K. Power Prices Soar Above £2,000 on Low Winds,” Bloomberg
“Some coal and gas power stations in Britain were paid double the price of exchange-traded electricity to help plug a gap left by a drop in wind generation on Monday.
Two coal-fired units at Uniper SE’s Ratcliffe station got more than 3,200 pounds ($4,295) a megawatt-hour while four gas units
received 3,500 pounds. Intraday power in the U.K. soared to 1,500
pounds for the half-hour to 6:30 p.m. on the Epex Spot exchange, with wind-power generation falling to the lowest level in 56 days. Prices for Monday were almost double the average day-ahead rate for this year.
Britain is set to end the use of coal within three years and make power generation free of fossil fuel by 2035. But for now it falls back on high-emission coal when wind drops or demand increases. Wind generation on Monday was meeting just 6% of total demand, National Grid data show, while gas contributed 55% and coal 2%.
It’s Finally Getting Cold and Europe Doesn’t Have Enough Gas…
A strained power situation in the rest of Europe is also limiting export capacity to the U.K. French day-ahead power prices rose as a strike lowered output on Monday, while prices in Germany increased to the highest level since Oct. 6.
The strike has cut output from Electricite de France SA’s generation fleet by about 2 gigawatts. That will reduce the amount of supply that can be exported to Britain along two key interconnectors. A limit on flows through the North Sea Link, that has been reduced to half capacity since Oct. 1, was extended to Thursday. The fault has delayed a ramp up to 1,050 megawatt that was planned for later this week.”…
Added: Low wind speeds in UK force reliance on natural gas and coal. Britain’s wind farms contributed just over 4 per cent of electricity on Monday, Nov. 15.
11/15/21, “UK peak power prices rise to second highest level since 2018,” Financial Times, ElectricityForum.com, London, Nathalie Thomas
“Low wind speeds increase reliance on gas generation, with coal plants also brought back into action.
“Low wind speeds pushed peak hour power prices to the second highest level for at least three years on Monday as Britain’s grid was forced to increase its reliance on gas-fired power plants and draw on coal generation.
Calm weather this year has exacerbated the energy price crisis in the UK, as gas-fired power stations have had to pick up the slack from wind farms….
Power prices in the UK for the peak evening period between 5pm and 6pm on Monday surpassed £2,000 per megawatt hour, only the second time they have exceeded that level in recent years.
This was still below the levels reached at the height of the gas price crisis in mid-September [2021], when they hit £2,500/MWh, according to the energy consultancy Cornwall Insight, whose records date back to 2018….
Despite the expansion of renewables, such as wind and solar, over the past decade, gas remains the single biggest source of electricity generation in Britain, typically accounting for nearly 40 per cent of output.
At lunchtime on Monday, gas-fired power plants were producing nearly 55 per cent of electricity, while coal accounted for 3 per cent. Britain’s wind farms were contributing…just over 4 per cent, according to data from the Drax Electrics Insights website….
National Grid, which manages the UK’s electricity grid, has been forced on a number of occasions in recent months to ask coal plants to fire up to help offset the loss of wind generation. The government announced in June that it planned to bring forward the closure of the remaining coal stations to the end of September 2024.
Ministers also committed this year to making Britain’s electricity grid “net zero carbon” by 2035, although some analysts have pointed out that would not signal the end of gas generation.
Since the start of the energy crisis in August [2021], 20 energy suppliers have gone bust as they have struggled to secure the electricity and gas needed to supply customers at record wholesale prices, with further failures expected in coming weeks….
Energy companies including Orsted of Denmark and SSE of the UK have reported some of the lowest wind speeds for at least two decades this year.
According to weather modelling group Vortex, the strength of the wind blowing across northern Europe has fallen by as much as 15 per cent on average in places this year.”…
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Added: The French strike has reduced exports to Britain along two key interconnectors.
11/16/21, “Power prices surge after low winds cause shortfall," UK Times, Times Business Reporter
“Low wind speeds pushed UK power prices to the second-highest level on record yesterday, forcing the grid to switch to gas-fired power plants and draw on coal generation.
Prices for the hour between 5pm and 6pm rose to £2,000.01 per megawatt-hour in the N2EX day-ahead auction for Monday, with wind-power generation falling to the lowest level for 56 days, according to Bloomberg. Coal plants were picking up some of the shortfall but a strike in France is further limiting supplies.
The French strike has cut output from Électricité de France’s generation fleet by about two gigawatts. This will reduce the amount of supply that can be exported to Britain along two key interconnectors. A limit on flows through the North Sea Link, which has been”…(subscription)
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Added: Britain gets only 5% of its natural gas from Russia:
10/18/21, BBC: “The UK’s gas storage is currently at full capacity–but Russia only provides about 5% of the country’s usage, so it’s less reliant on Russian imports than other European countries....Russia supplies about 50% of the EU’s natural gas imports. Most of the rest comes from Norway and Algeria.” Chart below from BBC
The UK’s gas storage is currently at full capacity–-but Russia only provides about 5% of the country’s usage, so it’s less reliant on Russian imports than other European countries.
Russia’s own gas storage is also down.
Adeline Van Houtte, a Europe analyst at the Economist’s Intelligence Unit, says: “Currently, the Russian domestic gas market remains tight, with output already near its peak and winter is looming...limiting gas export capacity.”
There are several other factors affecting the situation in Europe, such as:
*cold weather at the start of 2021 depleting stocks
*rising prices in spring and summer put traders off buying to sell later in the year
*limited supply from Norway because of maintenance issues
*reduction in other energy sources such as wind power
*growing demand for gas elsewhere in the world.”…
10/18/21, “Europe gas prices: How far is Russia responsible [if at all]?" BBC, By Jake Horton
“Gas storage across Europe is well below the 10-year average, with levels currently at about 75% of storage capacity, according to Gas Infrastructure Europe data.”
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Added: Excerpts from 10/13/21, “Russian Energy Week International Forum plenary session:”
“Vladimir Putin took part in the plenary session of the Russian Energy Week International Forum. The panel discussion topic is Global Energy: Transformation for Development.”…
[Pres. Putin]: “Over the past 10 years, the share of renewable energy sources in the European energy balance has skyrocketed, which, on the face of it, appears to be a good thing – and they are now playing a significant and noticeable part. What can you say? It is a good thing any way you look at it.
However, this sector is notorious for erratic power generation. It requires large reserve capacities. In the event of major generation failures, primarily due to bad weather, this reserve is simply not large enough to cover the demand.
This is exactly what happened this year, when, due to a decrease in wind farm generation, there was a shortage of electricity on the European market. Prices soared, which triggered a spike in natural gas prices on the spot market.
Importantly, gas consumption is seasonal. Its reserves are traditionally replenished in the summer to meet the winter demand. However, this year, even after a cold winter in Europe, many countries chose not to do so, relying on spot gas supplies and the “invisible hand” of the market, but a spike in demand has sent prices even higher.
To reiterate, the rise in natural gas prices in Europe stemmed from shortages of electricity, not the other way around. There is no need to lay the blame on other people, which is what some of our partners are trying to do. Occasionally, you get stunned by what is being said on this account, as if these people do not know the numbers – I will say more about this later – as if they do not see the reality and are just covering up their own mistakes. Systemic flaws have been gradually introduced in European energy over the past decade, which led to a major market crisis in Europe.
As a reminder, when nuclear and natural gas-based generation were the leading energy sources, there were no such crises, and there were no grounds for them.
Thankfully, problems of this kind have no place in Russia. A long-term approach to the fuel and energy complex allows us to set Europe’s lowest residential and industrial electricity rates….
The growth of rates in our country is limited and is strictly regulated, which is not the case in European countries, where, due to an increase in the cost of power generation, utilities bills have been climbing almost every month recently. I have these numbers on my fact sheet, but I am not going to bore you with the details now.
I would like to say a few more words about the gas market situation. You often hear that high listings are good for raw materials producers allowing them to see super-profits without making any visible effort.
However, those defending this position do not understand what they are talking about; they prefer not to look ahead, and are slow to take into consideration the long-term implications. But these implications are clear, including for the industry: the dramatic, repeated surge in energy prices influences business, the economy, and the utilities sector during periods of drastically increased costs; many businesses are forced to cut energy consumption and reduce production volumes. This means that high prices can ultimately have negative consequences for everyone, including producers. Russian producers, including those in this room, are well aware of this.
Stability and predictability are important in any market. Russia fulfils its contractual obligations to our partners in full, including its partners in Europe, ensuring guaranteed, uninterrupted gas supplies in this direction. We are seeing conditions that will result in record high volumes of gas distribution to the global market by year end. Moreover, we are always willing to meet our partners halfway and are ready to discuss additional actions.
We consistently work to strengthen the energy security of the entire European continent. Major infrastructural projects – Turk Stream, Balkan Stream, Nord Stream 1 and Nord Stream 2 – are being implemented jointly with European companies, our partners and friends. Their task is to ensure, for years ahead, the stability and predictability of gas availability in the amounts needed by the European countries. I would like to add that the implementation of these projects is leading to a considerable – by several orders of magnitude – reduction in greenhouse gas emission. Just for your information: the carbon intensity of Russian natural gas distribution along the Nord Stream 1 pipeline is 66.7 percent lower than that of US LNG. I am saying this just to compare.
At the same time, we now need to come to terms regarding the global mechanisms to balance the energy market. We should launch a meaningful, substantive dialogue between energy producers and consumers on this issue, a dialogue free of political bias and imposed clichés. We are talking about extremely important matters, which directly influence the functioning of business and organizations, as well as the wellbeing of households and millions of people both in Russia and in our partner countries, including those in Europe. I am confident that this dialogue can help find solutions that take into account market trends and the interests of all sides….
Friends,The consequences of the pandemic and the shakeup of the regional energy markets have shown once again how important it is to ensure the stable, confident performance of the fuel-and-energy sector for the modern world and to supply consumers with affordable energy with minimal impact on the environment.
All participants in the market – both producers and consumers – must take balanced and responsible action to ensure the world’s energy and environmental security. They should tailor these actions to the long-term perspective in the interests of the sustainable development of our countries and the prosperity of our people.
Russia is ready for such constructive, trustworthy and close cooperation, including a direct dialogue with our partners in Europe and with the European Commission….I am confident that we will definitely achieve results in resolving these difficult issues.
Thank you for your attention.”
“Plenary session [US] moderator Hadley Gamble: Mr President, in your remarks, you just were mentioning about what is happening in the gas crisis.…I want to ask you about it directly. Has Russia been using energy as a weapon?
Vladimir Putin: Russia is not using any weapons at all, if you have noticed. With regard to the economy, where would we be using weapons? What conflicts are we participating in? This is absolutely out of the question when it comes to the economy. Even during the most complicated Cold War periods, Russia fully complied with its contractual obligations and supplied gas to Europe. By the way, back then your compatriots in the United States were also opposed to a pipeline for this gas project. The leadership of the Federal Republic of Germany at that time was successful in having its own way and saw this project through to the end. It is still operating and is a part of Europe’s energy balance.
The weaponising of energy is nothing but politically-driven and entirely groundless bloviation….
We are increasing supplies to Europe even amid today’s conditions that are challenging for us. Gazprom has increased gas supplies to Europe by about 10 percent, and gas supplies to Europe have increased by about 15 percent including LNG, because LNG has increased to about 13–14 percent. We are ready to keep doing so. Importantly, our companies have never, not once, refused to meet our partners’ requests to increase supplies. Even during the challenging autumn-winter periods in recent years, when our partners asked us to increase supplies even in excess of our contractual obligations, we have always done so and are doing so now. We supply as much gas as our partners ask for.
I would also like to draw your attention to another circumstance, where supplies of, say, US LNG went from Europe to Asia when prices changed accordingly. Of the total shortage of LNG supplies to the European market, which is over 14 billion cubic metres in terms of LNG, about half had been undersupplied by US companies.
So, who is weaponising energy? Is it us or someone else? We are increasing our supplies to Europe, and our partners from other countries, including the United States, are decreasing supplies to Europe. This is open information. All you need to do is go online and see for yourself, everything is there. And you are talking about Russia being accused of weaponising energy resources. This is complete nonsense and politically-driven chatter, which has no substance behind it. This is how things are in general….
The Americans have introduced sanctions in the energy sector. What have they achieved? ExxonMobil has withdrawn from profitable contracts, stopped its participation in them with one exception for a contract in the Far East, which it has been part of for a very long time. So, who has gained anything? Nobody has gained anything. Gas prices have skyrocketed and the Americans have to suffer from some events that took place in the oil market. The result is not just zero but negative for those who are doing this. I hope the realisation that this policy has no future will eventually prevail and we will be able to gradually restore our relations….
Vladimir Putin: Let us look at what is going on without any political clichés. You mentioned Russia’s willingness to increase energy supplies to Europe and the rest of the world. So, do you want us to increase them or not? If you do, then we need to produce it. Or do you not? Electricity does not come from a power outlet; we need a primary source of energy to produce it in order to meet the growing needs of Russia and the global energy market.
Now let us face reality. We have increased not only gas supplies, but we have also increased coal supplies to the global market by 8 percent in both directions – to the East and to the West – and to Europe as well. Production increased by about 8.5 percent, and our exports grew by 8 percent….
You know that, say, car producers are being compelled to switch to electric vehicles. Well, this is because automobile transport is a major polluter. We know this….But what is the primary source? As I have already said, electricity does not just come out of the socket. In the Federal Republic of Germany, for one, coal generation amounts to 35 percent in the energy balance; 30, 33, 35 percent is coal generation that releases the most CO2 emissions in the air. Make all the electric vehicles you want, but coal generation at power plants will contribute to higher emissions. Meanwhile, the effects of gas are not as bad. But understand, you have to look professionally at all these issues….
Hadley Gamble: The Europeans [allegedly] have a trust deficit with Russia, and it is not just because of this current crisis in the gas market. It is also, [allegedly] of course, the massing of 80,000–100,000 Russian troops on the Ukrainian border.
At what point do you believe that you will solve these issues with your European partners? Because it requires dialogue. Would you be willing to talk to NATO directly?
Vladimir Putin: Yes, we are ready to deal with NATO directly as well.
As for our troops, they are on Russian territory. We held the Zapad 2021 military exercises quite recently. This is true. These are large exercises and we conducted them on our territory.
Our so-called partners from America also hold such large-scale exercises but they do it thousands of kilometres away from their national territory. After all, we did not come to the suburbs of Washington or New York to conduct drills. They came to us and conduced them at our borders. How should we react to this? Let me repeat that we hold exercises on our national territory. There is nothing surprising in this and we are not going to explain ourselves to anyone over it.
In effect, our partners are themselves destroying all prior agreements, including those on confidence-building measures in Europe. This concerns the eastward expansion, as I have already said many times. This also concerns the extreme imbalances in the Baltic states, whose armed forces are not counted anywhere, and so on and so forth.
We are not violating anything, not a thing. We did not withdraw from the ABM Treaty or the INF Treaty. We did not walk away from the Open Skies Treaty. It was not us who did it – this was done by our American partners. But to avoid responsibility, they lay the blame on us, while the media blows up the story in the interests of whoever is paying. That is all. Nothing surprising is happening in the world. However, we will do what we deem necessary while protecting our interests and ensuring our security.
I assume that…
Hadley Gamble: Is that why you have developed a hypersonic missile that flies at Mach 3 and is precision guided?
Vladimir Putin: No, Mach 3 or even greater is being developed in the United States. Our system travels at a speed of over Mach 20. These are not just hypersonic, but intercontinental missiles. This is a much more serious weapon than you just said. They have been put on combat duty in Russia. Other countries are developing similar systems. There is nothing unusual about it, and high-tech armies around the world will have such systems soon. There is nothing unusual about it.
Please note that, while having such systems and having for the first time in history outperformed our main competitors in high-tech weapons systems, in this case, the United States, we are not abusing this advantage and are not threatening anyone. Furthermore, we are willing to talk about the reduction of offensive arms. And based on the assumption that our US partners are interested, we are willing to keep in mind that we have such systems and, one way or another, take this circumstance into account during the negotiating process.
There is no need to build up pressure. All we need to do is stop the idle chatter and sit down for a substantive discussion on this subject. As we can see, the current administration is gradually embarking on this path, and our contacts to this end have been expanding, by the way, since I met with President Biden in Geneva.
Hadley Gamble: This isn’t the beginning of an arms race?
Vladimir Putin: I must admit that the arms race is already underway, unfortunately. It began after the United States withdrew from the ABM Treaty. Please note what I said to our partners back in 2003: do not do this, please do not withdraw from the ABM Treaty. It is a fundamental thing, a cornerstone of international security.
What is missile defence about? It is not just defence, but an attempt to gain strategic advantages by neutralising the nuclear capacity of a potential adversary, that is, us. How are we supposed to respond? I have said it many times before and, if you are interested, I can say it again: we either need to create a similar system with unknown effectiveness which will cost us a fortune or create a different system which will certainly be able to overwhelm missile defence. I said back then that we would create it. Our US partners had the following to say back then:
our missile defence system is not directed against you, so you do whatever you want, and we will operate on the assumption that it is not directed against us. That is what we did, so what now? Now, they do not like it. Now they say: oh, now you have this hypersonic weapon. Well, you do not like it, but we did not like it when you withdrew from the ABM Treaty, either. We are not the ones who started this, but we are now ready to keep in mind the objective circumstances and to conduct a constructive dialogue to this end….
Do not worry about us and better think about yourself and what is going on at your home….
Vladimir Putin: I would like to thank our moderator who, I believe, has created a certain atmosphere and our colleagues and friends from energy companies for taking part in our work. They did this despite their very busy schedules. They work not only in their own countries but also all over the world, since these are global companies and they have schedules for travelling around the world. I am hoping that those who are with us via videoconference and those in this hall will continue working productively as in previous years despite all the difficulties that we are facing today in the global energy industry.
I would like to assure you that on our part, the Government of the Russian Federation and yours truly will do all we can to create for you the necessary conditions to work in Russia. This work will conform to the highest environmental standards while also yielding maximum economic benefits for your companies. We have already done much in previous years. I am confident that we will soon do even more in the interests of the global energy industry and the countries where we work.
Thank you for taking part in our work today. Thank you very much.”
Above from:
10/13/21, “Russian Energy Week International Forum plenary session"
“Vladimir Putin took part in the plenary session of the Russian Energy Week International Forum. The panel discussion topic is Global Energy: Transformation for Development.”
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