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ENERGY

European electricity prices soar as tough winter looms

European electricity prices soared to new records on Friday, presaging a bitter winter as Russia's invasion of Ukraine inflicts economic pain across the continent.

electricity pylons at sunset
Energy prices have soared in Europe as Russia has slashed natural gas supplies to the continent. Photo by Matthew Henry on Unsplash

The year-ahead contract for German electricity reached 995 euros ($995) per megawatt hours while the French equivalent surged past 1,100 euros — a more than tenfold increase in both countries from last year.

In Britain, energy regulator Ofgem said it would increase the electricity and gas price cap almost twofold from October 1 to an average £3,549 ($4,197) per year.

Ofgem blamed the increase on the spike in global wholesale gas prices after the lifting of Covid restrictions and Russian curbs on supplies.

The Czech Republic, which holds the rotating European Union presidency, announced Friday that it would convene an EU energy crisis summit “at the earliest possible date”.

Energy prices have soared in Europe as Russia has slashed natural gas supplies to the continent, with fears of more drastic cuts in the winter amid tensions between Moscow and the West over the war.

One-fifth of European electricity is generated by gas-fired power plants, so drops in supply inevitably lead to higher prices.

European gas prices on Friday reached 341 euros per MWh, near the all-time high of 345 euros it struck in March.

The war is not the only culprit in France.

The shutdown of several nuclear reactors due to corrosion issues has contributed to the French electricity price increase as power production has dramatically decreased in the country.

Only 24 of the 56 reactors operated by energy giant EDF were online on Thursday.

READ ALSO: France extends shutdown of four nuclear reactors amid corrosion problems

France, which traditionally exports electricity, is now an importer.

“Winter is going to be a tough period for all the countries in Europe,” Giovanni Sgaravatti, research assistant at the Bruegl think tank in Brussels, told AFP.

“Prices will stay high, possibly they can even go higher,” he said.

READ ALSO: Air-con, ties and lights: How Europe plans to save energy and get through winter without blackouts

Recession ‘probably unavoidable’

A Bruegel study found that European Union countries have allocated 236 billion euros from September 2021 to August 2022 to shield households and firms from rising energy prices, which began to increase as countries emerged from Covid restrictions and soared after the war.

In recent days and weeks, countries have announced energy-saving campaigns to encourage the public to reduce power consumption during the winter.

Germany announced Wednesday that the temperature of public administrative offices this winter would be capped at 19 degrees Celsius (66 degrees Fahrenheit) while hot water would be shut off.

The German measures also include a ban on heating private swimming pools from September and over the six months that the decree is in place.

Finland is encouraging its citizens to lower their thermostats, take shorter showers and spend less time in saunas, a national tradition.

French households are shielded by an energy price cap until December 31 for now.

Industries are also affected by the soaring energy prices.

Factories that produce ammonia — an ingredient to make fertiliser — announced the suspension of their operations in Poland, Italy, Hungary and Norway this week.

HSBC bank warned in a note that “recession is probably unavoidable” in the eurozone, with the economy shrinking in the fourth quarter and the first three months of 2023.

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ENERGY

EXPLAINED: When should I turn on my heating in Sweden this year?

Energy costs in Sweden are set to reach sky-high levels this winter, which will leave many people wondering when they should start heating their homes. Here's what you need to bear in mind.

EXPLAINED: When should I turn on my heating in Sweden this year?

What’s happening?

As a result of supply stoppages for cheap Russian gas affecting energy prices on the European market – particularly in Germany – energy prices in Sweden have been at record levels for months, especially in the two energy price zones in the south of the country.

With winter looming and no sign of things getting cheaper anytime soon, private individuals are starting to cut down on energy usage as much as they can to slash their bills this season.

Does it make a difference what type of accommodation I live in?

The right time to start heating your home depends on several factors including your own personal preference, the weather, whether you live in rented accommodation or own your own property, and on the age and features of the property you live in.

How does the heating system work in Swedish homes?

More than half of all houses and commercial properties in Sweden use district heating or fjärrvärme, with this number rising to around 90 percent for apartment buildings.

This system distributes hot water from heating plants to houses and apartments through underground water pipes, meaning that heating sources are centralised, rather than individual houses or apartments having their own heating source.

In smaller towns and in houses, district heating is less common, and it’s these households who can benefit the most from waiting longer to turn on their heating.

Do I control my heating?

It depends. If you live in a rented apartment or a bostadsrättsforening (co-operative housing association) with district heating, your landlord or the board of your housing foundation will usually decide for you when to turn your heating on.

Unlike other countries, Sweden has no official legal heating season, with heating in bostadsrättsföreningar usually switched on automatically following periods of cold weather, no matter which date they occur on.

This will usually be designed to provide an indoor temperature of around 21 degrees – you can turn your radiators down if you feel this is too warm, but you won’t usually be able to turn them up if you want the temperature to be warmer.

The Public Health Agency recommends temperatures of between 20 and 24 degrees indoors, with temperatures lower than 18 degrees in apartments posing a health risk.

Temperatures lower than 14 are not recommended as they can cause condensation and mould growth on walls and furnishings, which, again, are a health risk, and can cause permanent damage to properties.

Can I save money by waiting to turn my heating on?

Again, it depends. If you’re renting and you pay varmhyra – rent with heating included – then you won’t save money directly, but heating your home wisely could make it less likely for your landlord to raise your rent to cover increased heating costs.

If you pay kallhyra – rent without heating included, then waiting to turn on the heating will save money on your electricity bill.

Similarly, in some housing associations, electricity and heating costs are included in your monthly fee, meaning you pay your share of the heating costs for the entire building ever month. In this case, your energy costs are more affected by how much energy everyone else in your housing association uses than your individual usage.

On the other hand, this doesn’t mean you shouldn’t care about how warm your heating is – if you have your heating on full-blast for the whole winter, your costs will increase as well as the costs of all of your neighbours, and if the entire association’s energy costs increase substantially, the board may decide to raise the monthly fee or avgift for everyone in the building to cover this.

If you pay an individual energy bill based on your own household’s usage, and not on an average of the whole building, it could pay to wait before you switch on your heating.

How else can I save money on heating costs?

Turning your heating down a couple of degrees can make a big difference to your heating costs, but you can also save money on heating and make your property feel warmer by making it more energy effective.

There are a few easy ways to do this, according to the Swedish Energy Agency.

Firstly, make sure your house is well insulated, not just your doors and windows, but also in the loft: a large amount of a building’s heat escapes through the roof. This also applies to the boundaries between well-insulated and poorly-insulated areas.

If you have a cellar or conservatory, for example, which is not heated and not insulated, make sure the door between this room and the rest of the house is well-insulated with no gaps around the doorframe where heat can escape into the colder room. 

In a similar vein, locate any drafts and do what you can to block them, either with draft excluders or by replacing worn-out draft excluder strips on old doors and windows.

You can also benefit from thinking about how you furnish your home – furniture placed in front of radiators mean it is harder for warm air to circulate, and you can keep your house warmer at night by closing your curtains or blinds to keep eat from escaping through your windows.

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