Europe looks increasingly complacent about the winter ahead – The Economist

by | Dec 15, 2022 | Financial

“We are safe for this winter. Russia’s blackmail has failed.” Ursula von der Leyen, president of the European Commission, was in a confident mood on December 12th, speaking during the first cold spell of the season. It was a confidence born of a sure-footed start to winter. It may also turn out to have been premature.The continent enjoyed a warm autumn, with October and November much balmier than normal. But Arctic cold arrived at the beginning of December, as temperatures dropped below zero in Berlin, London and Paris, prompting fears that gas supplies would be hit and electricity networks would falter. In France, each degree centigrade drop in temperature requires an additional 2.4gw of generation capacity, the equivalent of an average nuclear plant. So far, though, Europe has stood up to the test. Consumers have shown a willingness to cut back. According to Bruegel, a think-tank, German industry, small businesses and households reduced gas consumption by a quarter in November, compared with the three-year monthly average. Gas has been withdrawn from storage, but only at levels well within historic limits (see chart). Liquefied natural gas (lng) has flowed into Europe’s ports in record volumes. Gas futures prices for early 2023 climbed, as traders accounted for the weather, but the rise was not all that sharp. Backup plans have gone into action across the continent. France has called on neighbours to supply lots of power. Britain’s grid operator ordered two reserve coal plants to prepare to generate, though later decided they were not needed. One of Germany’s four grid o …

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