Experts: Energy market still volatile

Lights. Source: Siim Lõvi /ERR

According to European experts and politicians, Europe's energy crisis is not over but the upcoming winter will not be as difficult as the last one. Nonetheless, despite the current low gas costs, future electricity rates could fluctuate dramatically.

In the previous month, the market price of natural gas in Europe dropped to a post-war low of €23 per megawatt-hour, before nearly doubling in a week to €41.

According to experts, this is a sign of a robust energy market but nevertheless this could change quickly.

"The overall situation on the European energy market remains tense. As a result, we anticipate continued price volatility on the gas market, as has been the case over the past few weeks," Simone Tagliapietra, an energy analyst at the think tank Bruegel, told ERR.

Minister of Climate Kristen Michal (Reform) said that other forms of energy will enter the market during the winter, when solar and wind energy are less abundant. "Perhaps occasionally use more expensive fossil fuels. Nevertheless, I believe that countries and energy markets are better prepared for what this winter brings," he said.

"Of course, this does not rule out Russian malign behavior in the field, but I am optimistic that we will be able to cope," the climate minister said.

Europe's energy consumption has been drastically reduced over the past year, and this has been one of the main success drivers. Clearly, the moderate winter also played a role.

According to the European Commission, there are still challenges. "We are still in a situation where some countries receive gas from Russia and as soon as Asian demand returns to pre-pandemic levels, price competition on the large Asian market will become quite intense again," European Energy Commissioner Kadri Simson said.

This was reflected in the volatility of gas prices in June, which was driven by the Chinese stimulus package as well as problems in Norwegian gas supply. However, during the winter, Europe has already accumulated gas reserves.

Our gas storage facilities are currently 70 percent full on average across Europe. This year, they will be much easier to fill than they were last year, Tagliapietra said.


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Editor: Mirjam Mäekivi, Kristina Kersa

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