“Whatever the scenario, you have to save gas and electricity this winter”

Despite the measures taken to control energy prices, price increases are inevitable.

© REUTERS

Text by: Ariane Gaffuri Follow

7 mins

In her State of the Union speech, this Tuesday, September 14 in Strasbourg, Ursula von der Leyen pledged to implement " 

 " of the electricity market in the face of soaring electricity prices. the energy which weighs down the economy of the Twenty-Seven.

Decryption with Jacques Percebois, professor emeritus at the University of Montpellier and director of Creden, the Center for Research in Energy Economics and Law. 

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RFI: Ursula von der Leyen wants to " 

 " and limit the revenues of certain energy producers in order to raise 140 billion euros for households and companies in difficulty . 

Jacques Percebois

 It's a short-term measure to extinguish the fire.

It consists in capping the price at which the power stations, which are not gas power stations, will be able to sell their electricity.

The price of gas power plants will remain high because the cost of gas is very high.

What Ursula von der Leyen wants is that non-gas power plants, thermal power plants in general that use coal for example, do not benefit from these very high prices.

So we would cap their selling price.

And the difference, 140 billion euros according to Ursula Von der Leyen, would help the consumer, that is to say lower the price. 

One hundred and forty billion euros is a global sum, but the consequences will be very different from one country to another.

Take the case of France, where the price of nuclear electricity is already heavily capped.

For various historical reasons, nuclear energy is, for the most part, sold at a very low price: 42 euros or 46 euros per MWH, whereas on the market, we are at 400, 500 euros and in the evening at 7 p.m. at 630 euros.

Plants that use renewables, wind power in particular and even solar power, benefit from what are called contracts with “market complement”.

That is to say that when the wholesale market price was low, these power stations had a market complement, an additional income which enabled them to bear their costs.

As the prices today are very high, the system causes the market complement to become negative.

That is to say that beyond the ceiling price, which was already provided for in the ministerial decrees, these renewable power plants pay back to the State the overflow already collected.

This is how the French State should recover close to 8 billion euros.

It is enormous !

So there will be consequences in some countries where there is no capping mechanism.

For France, there will probably be a few power stations that will be forced to donate part of their revenue, but we already have a highly regulated system compared to the European average.  

Another measure announced by Ursula von der Leyen, reducing energy consumption at peak times, but also launching a public bank dedicated to hydrogen which could be able to invest three billion euros to " 

 .

Is it a medium-long term project? 

Yes.

Faced with the electricity crisis, it's like fighting forest fires, you have to put out the fire first, then you have to worry about how you modify the forest to avoid fires.

So obviously, in the long term, the European Commission wants to develop renewable energies, but it knows very well that they are intermittent.

So its concern is to carry out inter-seasonal storage and this involves hydrogen.

But for now, these are only projects, because the efficiency of electrolysers is low, especially if you are electrolyzing water to obtain hydrogen.

Then, this hydrogen is stored and then used to remanufacture electricity, the overall yield is around 30% today.

So in the long run, 

The President of the Commission also wants to establish “strategic reserves” to avoid disruptions in the supply of critical raw materials which weigh on the industries of the Member States. 

So that is a very good measure and, in fact, we can do it now.

We must anticipate the constraints of tomorrow.

To put it quite simply, the decarbonization of the electricity mix does not mean that there will be no more geopolitical constraints.

Today, the geopolitical constraints are the dependence on Russian gas, so some say: tomorrow, when electricity will be largely nuclear or renewable, we will no longer be subject to these geopolitical constraints.

This is not entirely true, because to develop renewables, whether solar or wind, you need rare metals, rare earths, lithium, cobalt, copper, and all these products these are either imported or refined in China.

So what she says,

it is that we must now think about strategic destocking for all these ores and rare metals and avoid depending tomorrow on China.

It is up to Europe to be present in the production and storage of all these minerals and strategic metals. 

Is Europe still very dependent on Russian gas? 

Russian gas accounted for 40% of European Union imports.

It was less in France, 17%.

And today, we are 9% dependent, and if this continues, as the storage facilities are well filled and we have diversified the sources of supply quite well, we will in fact be able to do without Russian gas.

Solidarity with the western point has made it possible to do without Russian gas.

It is important.

Moreover, we are seeing scenarios appear today, and I am thinking in particular of a scenario from the bank Goldman Sachs, which says that it could be that, given this situation of less dependence, gas prices to fall in the coming months.

In my opinion, this is a hypothesis which today deserves to be analyzed and verified, but it is not only people who think that the price of gas will soar.

It is not impossible that we manage to disengage from this dependence on Russia. 

Will we have enough gas to last the winter? 

Whatever the scenario, it is in our interest to save both gas and electricity for this winter.

RTE (the Electricity Transport Network in France, editor's note), this Wednesday morning, held a press conference where they said: we must save electricity, especially during peak hours;

you have to make an effort, because you risk having load shedding.

I don't think we're out of the woods for this winter.

There is a risk of having tensions on the gas market, on the electricity market.

This will depend, in France in particular, on the availability of the nuclear fleet and therefore it would seem that the nuclear power plants are not all available at the start of winter.

Tensions are therefore to be expected.

There is a factor that no one controls and which will play a central role, and that is the temperature.

If the temperature is very cold, obviously the demand will be greater and therefore sobriety, energy savings, whether in gas or electricity, will be essential.

Otherwise, it is load shedding.  

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