Pre-programmed in EU Energy System, Bigger Blackouts Can Be Expected in 2022

Power blackouts, albeit on relatively small and local or regional scales, have become a daily pattern in many European countries over the past years. They were caused, to a large extent, by so-called “repercussion disturbances” triggered by problems in coordinating calculable flows of electricity or gas between the hundreds of different operators in the grid.

Before the European Commission’s first major directive in 1996 for deregulation and liberalization of the energy sector, the energy supply was guaranteed by long-term agreements with the generally large utilities, which produced and transported natural gas and electricity. But under the new system, these functions were separated, opening the door to the mushrooming of a vast number of new small-small enterprises, that either produced or transported or just traded. Today, Germany alone has no less than 450 electricity providers.

But even when larger entities still exist in the energy sector, the separation of functions (there have been four more Commission directives since 1996) poses uncertainties for the supply. Just to cite one example, which was scarcely mentioned in the mainstream media, an incident occurred last month that could have caused a blackout of gas in Germany, had the government not intervened with a three-digit million sum to secure the supply. This incident, reported in an article Jan. 9 on the website of the EIKE network of energy experts, points to the increasingly dramatic situation in the energy sector.

In December, the German Economics Ministry instructed the Reconstruction Bank (KfW) to transfer a three-digit million sum to Trading Hub Europe GmbH (THE). Without that money, the trading company would have been unable to pay for the gas it needed to keep the gas pipelines under pressure during December. Since June 1, 2021, THE has controlled the entire German gas market and is responsible for purchasing and transporting the gas. Until then, the market had been divided between two “market area managers”.

The December incident is all the more alarming following the shutdown of three nuclear reactors on Dec. 31, 2021, which had provided 6% of national energy mix. That, coupled with the unpredictability of supplies of renewables, in particular wind power, have substantially increased the need to use more natural gas than before. Add to that the fact that the gas reserves which Germany may still have, are not necessarily used to cover national needs, but are also sold to traders in another country where a lack of gas can ensure higher profits, as is now the case for Sweden or Poland. This is made possible by the European Union’s liberalization policy,which removed the regional supply guarantees to replace them with an all-European energy market. Unless these policies are reverted, Europe is sure to be faced with more, and even bigger, blackouts.

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