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How the energy crisis can favor renewables

It’s been a mild, sunny September, and yet energy prices are rising all across Europe. The trend has set alarm bells ringing, prompting the Greek energy minister to say that there is an international energy crisis. And while some may think that is doomsaying, there certainly is cause for concern as national governments scramble to react to record-high gas prices.

Greece is planning to offer subsidies to households to make energy costs more affordable, Italy is working on short-term measures to offset the spike, and Spain has already passed emergency measures to cut soaring prices. Elsewhere, the UK has been hit particularly hard: several energy suppliers have gone out of business and, to make matters worse, one of the country’s largest power cables that imports electricity from France has been shut down until the spring after catching fire.

Decarbonization and Clutching at straws
It is not unusual for gas prices to go up, but that tends to happen during cold winter months when demand rises. So, what is going on?
The current situation is quite complex and the underlying reasons are manifold: a global gas supply crunch, extraordinarily low wind levels and bottlenecks for renewables. Tackling these challenges might take quite a while or, as is the case with renewable energy, it is mostly beyond our control. Some people are suggesting that we should return to coal power plants, many of which have already been shuttered temporarily or even permanently. And with coal being gradually phased out – come 2030 the EU should be carbon free, as defined in the Paris Agreement – the plants that are still in operation are being disincentivized: they have to pay carbon tax for the CO2 they emit. In other words, wishing for a comeback for the dirtiest of fuels is simply clutching at straws, and definitely not a viable option.
Market price development - Electricity
Source: EEX Frontjahr NCG
In fact, we need just the opposite. As EU Commission Green Deal Chief Frans Timmermans and others have suggested, what we should do is double down and speed up the shift to clean energy sources.

A common argument against too heavy reliance on renewable energy is that its generation is volatile, which could threaten security of supply. And even though there is still some truth to that today, that should not be the case for much longer since supporting technologies such as batteries keep advancing at remarkable speed. Also, we should mention that it is in fact fossil fuel prices that are really unpredictable – unlike solar and wind energy, for example, which have fixed costs at the time of installation, the price of fossil fuels keeps changing as it is affected by several factors, most importantly geopolitics.

impact and opportunities

Strangely enough, for businesses like ours that specialize in renewable energy and related sustainable services, this worrying trend in energy markets is something of a blessing in disguise. Energy companies will now be looking to pass their higher costs on to private end customers, creating great incentives for the purchase of a photovoltaic system with battery storage. The price of CO2 certificates also keeps increasing, and these two parallel trends should further accelerate decarbonization as they are likely to make more and more people consider purchasing an electric car and, potentially, a charging station. In fact, having your own PV system makes the purchase of an electric vehicle all the more attractive: you produce the energy yourself, so why not buy an electric car that can consume that energy? In view of the rising gasoline prices and the strict exhaust emission regulations, it’s especially worth making such an investment.

The transition to green power was never going to be easy and we all knew that there would be bumps along the road, some unforeseen and unexpected, such as the current price surge. None of that should deter us, however, on our way to a sustainable future.

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