Insufficient natural gas reserves have driven the wholesale price of natural gas and electricity across Europe soaring, and there is growing concern that this increase will be passed on to consumers through utility bills. In the cold winter, the scarcity of resources may even lead to shortages.

In the UK, many people will see their gas and electricity bills increase next month after the national energy regulator approves a 12% price increase for those who do not have a locked-in rate contract. Italian officials stated that prices will rise by 40% in the quarter that will be billed in October 2021. According to data from the comparison website Verivox, in Germany, retail electricity prices have reached a record 30.4 cents per kilowatt hour, up 5.7% from a year ago.

For a typical family, this is equivalent to 1064 Euros ($1252) per year. Prices may also increase, as wholesale prices may take several months to be reflected in residential bills. According to her latest invoice, the electricity bill for Madrid resident Nieves Leal has increased from an average of 90-100 euros ($106-118) every two months two years ago to 158 euros ($187) in June 2021.

The news that wholesale prices have hit record highs and the political debate surrounding them worry her because the average price has risen by 35% in the past year. 63-year-old Ms. Leal cleans the house part-time and earns 500 euros ($590) a month. She and her daughter who lives with her have stopped buying clothes and reduced the electricity contract to a minimum. They only supply electricity for electrical appliances, and only cook, wash and iron after 2 pm or when the electricity bill is low on weekends. "It's shameful, but I have no choice." she said. "Even if I make twice as much money, I don't think any family can afford these abused prices."

How to deal with rising energy

Energy analysts said there are several reasons for the price increase, including the tight supply of natural gas for power generation, the increase in the cost of carbon dioxide emissions permits as part of Europe’s response to climate change, and, in some cases, a reduction in the supply of wind energy. The price of natural gas in the United States is low, and the United States produces it itself, while Europe must rely on imports.

In order to reduce the increase, the Spanish Socialist Party-led government abolished the 7% power generation tax imposed on consumers, reduced the individual energy tariff for consumers from 5.1% to 0.5%, and imposed tariffs on public utilities. Italy is using funds from emission permits to reduce bills. France is sending a 100-euro "energy check" to those who have received support to pay for utility bills. Roberto Cingolani, Italian Minister of Ecological Transformation, stated that the government is taking measures to reduce costs caused by the "international environment" and "ensure that the transition to more sustainable energy sources will not adversely affect households."

S&P Global Platts analysts said that due to strong demand in places such as data centers and electric vehicles, electricity prices have risen, but most importantly, the price of natural gas used by power plants has risen. With the decommissioning of high-emission coal-fired power plants, the impact of utility companies on natural gas prices has increased, and utility companies are facing higher carbon allowance costs required by the EU Emissions Trading System, which aims to reduce greenhouse gas emissions .

Keywords: new energy, overseas engineering, international engineering construction, foreign engineering construction news

In the European TTF market, natural gas prices have soared to a record high of more than 72 euros per MWh. The factors pushing up prices are strong demand in Asia and no longer linking prices to crude oil prices, which makes Europe more susceptible to market fluctuations.Editor/XuNing