ERS

July 17, 2023

PZ ERS in the news - The Telegraph: Fear of gas price rise: 'Netherlands underestimates risks'

Gas and electricity prices will start to rise again. Energy specialists fear setbacks and rising energy prices for consumers and businesses as the gas market tightens and supply becomes uncertain for the Netherlands.

Experts say the Netherlands is again underestimating the risks of extreme winters, the breakdown of gas production now that Russia is not supplying and there are too few gas imports. Moreover, the Groningen gas field will close in October. Lecturer Martien Visser of the Hanze University of Applied Sciences in Groningen warns that a single incident already drives up the price: the recent outage of a Norwegian gas field, for example, caused rates to rise immediately. Tightness is coming as China recovers economically and buys up more gas.

State Aid

Last winter, with skyrocketing energy prices thanks to state aid, Dutch households came through the energy crisis with pants cracks. EU countries agreed to fill more, at least 90 percent, of their gas storage for next winter. The Netherlands met that European goal in the middle of summer soon. "But that is also because stocks were already well filled because of a warm winter," said energy specialist Hans van Cleef of consultancy Publieke Zaken.

The gas price on the wholesale market has been falling steadily since the winter, with occasional peaks, from 67 euros per megawatt hour to now 25 euros. The Netherlands also uses a lot of gas in the summer: refineries are running at full capacity and on hot days households turn on the air conditioning en masse. Power plants powered by gas run at top capacity to supply power. Yet the "demand for gas is relatively low," according to Gasunie.

Nervous

But energy experts are nervous, a roundup shows. A recent outage at gas giant Norway, for example, earlier chased gas prices up immediately. Starting in August, major Norwegian gas plants will go into maintenance. "Then there is a chance that prices will rise again anyway," warns energy company Vattenfall.

"You can see that there are still many snags in the filling of gas reserves by the difference in price expectations," says Martien Visser, lecturer in Energy Transition at the Hanze University of Applied Sciences in Groningen. "Now gas costs 30 cents per cubic meter, it will be 50 cents at the end of this year on the gas market. Normally the difference is 5 cents, often less. This big difference marks a very nervous market."

"Before panic sets in, act now with procurement for coming years," says energy specialist Hans van Cleef of consultant Publieke Zaken. "That's the lesson from past years. The gas price is not determined by supply and demand, but mainly by its expectation such as the course of a war."

Written by:

Publieke Zaken

Continue reading