Title: Austria‘s Energy Crisis: Soaring Wholesale Prices and the Russian Gas Factor
In a stark turn of events, Austria finds itself grappling with some of Europe’s highest wholesale electricity prices since November, according to data from ENTSO-E. This surge, up to 131 euros per MWh in November and 130 euros in December, marks a significant departure from the traditional equivalence with German prices. Historically, Austrian prices were lower, with differences rarely exceeding 2-3 euros per MWh.
The halt in direct Russian gas supplies, particularly since November 16, has emerged as a key cause. Russia’s state-owned Gazprom paused deliveries following a payment dispute with Austrian energy giant OMV, which had won an arbitration case over a German contract. Consequently, gas prices have soared across Europe, with the Austrian Baumgarten hub recording higher prices than its German (THE) and Dutch (TTF) counterparts.
Gas-powered plants, while generating only 25% of Austria’s electricity, serve a crucial role in balancing the grid. Consequently, the 75% reliance on hydropower and renewable energy sources (RES) hasn’t averted the price crisis. OMV, longstanding partner of Russia, acknowledged it would mitigate losses by purchasing fuel at higher prices on the market and selling its Norwegian and LNG gas at premium rates.
Despite the halt in direct Russian supplies, Austria continues to receive Russian gas, exerting upward pressure on prices. Worse still, if Ukrainian transit stops, prices could escalate further, with Slovakia’s SPP selling the displaced Russian volumes to Austrian consumers. This possibility looms large as Austria’s 95% filled gas storage is set to run out by mid-March.
Austria’s energy crisis is compounded by its government’s price-capping program set to expire on December 31. Political leaders are divided over solutions, with Greens advocating a reduction in electricity tax and the suspension of renewable energy surcharges. Meanwhile, the Freedom Party recommends swift action against the incoming cost "avalanche," while NEOS’s Karin Doppelhoerr calls for a critical review of subsidies.
While Austria may not witness the record-breaking prices of 2022 (which peaked at $3000 per thousand cubic meters), consumers could face higher bills. Energy companies Wien Energie and OMV have already shifted costs onto consumers, with further changes likely if logistical issues arise.
The Local advises Austrian residents to minimize electricity consumption, while consumer rights groups recommend shopping around for cheaper energy tariffs. As the crisis unfolds, Austrians brace themselves for a challenging energy landscape in 2023.
