Russia’s unjustified aggression against Ukraine has reinforced uncertainty around the European security of gas supply and price volatility on the European gas markets according to the last European Commission’s quarterly gas market report, published today. The quarterly electricity report also highlights the impact of current geopolitical tensions on the EU’s electricity market in the first quarter of 2022. High wholesale electricity prices are putting pressure on retail prices, impacting both households and industry sectors with rising energy bills.
Q1 2022 gas market report
The gas market report outlines the volatility of gas prices in the first quarter of 2022, noting how the TTF spot price rose as high as 212 €/MWh on 7 March. Crude oil prices in early March rose to the highest (138 USD/bbl) since the summer of 2008, and coal prices also reached record highs (360 €/Mt).
The EU spent an estimated €78 billion on gas imports in the first months of 2022 (of which €27 billion on Russian gas imports). EU net gas imports rose by 10% during this period, whereas liquefied natural gas (LNG) imports were up by 72% year-on-year. LNG became the most important supply source during the first months of 2022, with 34% of the total extra-EU gas imports arriving in this form.
In comparison with the first quarter of 2021, gas storage withdrawals were less intensive. On 31 March 2022, the average EU storage-filling rate was 26%, around 4 percentage points lower than a year before. A relatively mild winter season and production cuts in gas-intensive industries might have contributed to less reliance on storage withdrawals, particularly amid high wholesale gas prices. Spot prices on the European gas hubs remained high and volatile in the first months of the year, showing a five-fold increase year-on-year within a range of 95-100 €/MWh. EU gas consumption fell by 8% (-11.6 bcm) year-on-year during the first quarter of 2022.
Q1 2022 electricity market report
The electricity market report shows how the impact of international sanctions to Russia and the fear of supply disruption have contributed for electricity prices to reach historical levels in the first quarter of 2022. The European Power Benchmark averaged 201 €/MWh in this period – 281% higher than in the first quarter of 2021. Electricity consumption decreased slightly (-1%), supported by a mild winter and the impact of high electricity prices.
The largest year-on-year electricity wholesale price increases in EU countries were registered in Spain and Portugal (+411%), Greece (343%) and France (+336%), with Italy reporting the highest quarterly average price (249 €/MWh), which was 318% higher than in the same period in 2021.
Carbon allowances registered a new peak in early February, climbing above 96 €/tCO2, fell in early March and bounced back to prices around 80-85 €/tCO2. For the first time since the rally in gas prices started, TTF prices stopped supporting the price of EU allowances.
Despite increased levels of fossil fuels generation, the share of renewable energy managed to reach 39%, outperforming fossil fuels (37%) in the first months of 2022. Compared to the first quarter of 2021, renewable generation increased its output by 1% (+1 TWh) as a result of an increase of 20% (+20 TWh) in onshore wind, 31% of solar (+8 TWh) and 8% of offshore wind (+1 TWh) on a yearly basis, despite hydro generation decreasing by 27% (-28 TWh). In the same period, a climb of 6% (+17 TWh) of fossil fuels and a drop of 9% (-16 TWh) of nuclear generation was registered.
The demand for electrically chargeable vehicles (ECVs) increased during the first quarter of 2022 year-on-year (+19%), resulting in more than 423,000 new ECVs registered in the EU during this period. This is the third highest quarterly figure on record, translating into a 19% market share – over three times higher than in the United States, but lower than in China.
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Details
- Publication date
- 8 July 2022
- Author
- Directorate-General for Energy
- Location
- Brussels