Electricity price quadrupled in Western Europe in 2021

The pull of the price of gas and the rights of CO2 emission in Europe in 2021 caused there an unprecedented rise in wholesale prices of the electricity, which multiplied by four compared to the previous five years in Spain, France, Germany or the United Kingdom.

The increase was generalized in all the large advanced economies since, according to the index of the International Energy Agency (IEA), the increase in prices was 64% when compared to that reference period, but in no region was it so exaggerated. as in Western Europe.

In its semi-annual report on the electricity markets, published on Friday, the OUCH points out that in the Nordic European countries in the last quarter, wholesale prices almost tripled those in the same last three months of the years 2016-2020.

But at an average of 96 euros per megawatt hour, prices in that region were half the prices in Western Europe.

In the United States or Japan, the increases in that fourth quarter reached, respectively, 75% and 80%. In Australia, the rise reached 174% in the second quarter due to coal shortage problems, but they were resolved and this later translated into a 50% decrease until the fourth quarter.

It grew 5.7% in 2021

After having slightly decreased in 2020 due to the COVID-19 crisis, global electricity demand in 2021 grew 5.7%, which means the largest increase in a single year in absolute terms (1,500 terawatts) and in relative terms the strongest since 2010, when the world was recovering from the financial crisis.

China alone accounted for half of the increase in that global increase in consumption.

To respond to this strong global demand, coal was used above all (+8.6%), the generation system that generates the most carbon dioxide (CO2). The consequence is that 2021 became the year in which electricity reached its record for greenhouse gas emissions, with an increase of 6.8%.

Renewables grew (+6.2%) but at a slower rate than consumption, and the same thing happened with nuclear (+3.5%) and gas (+2.1%).

It will rise at a rate of 2.7% per year

The IEA calculates that this year and the following two, consumption will continue to increase but at a lower rate, of 2.7%. That is to say, equivalent to what existed in the decade before the appearance of the coronavirus in 2020.

Emissions will also continue to rise, although at a much slower rate (0.2% per year) because the expected expansion of renewables (to 7.8%) will not prevent the use of coal from continuing to increase (to 0.3%) and gas (at 0.7%). Nuclear-based electricity will also grow at a rate of 1.1%.

It is true that coal will continue to lose ground strongly in America (-6.7% per year) and even more so in Europe (-10.7%), but this will be more than compensated because new coal plants continue to come on stream in China and India.

The executive director of the IEA, Fatih Birol, warns that while in order to reach zero net carbon emissions in the 2050 horizon, they would have to be reduced by 55% by 2030, if there is not a radical change in policy by the governments, in reality in the next three years they are going to remain at the same level.

“That not only underlines how far we are from the path to net-zero emissions by 2050, but it highlights the massive changes needed for the electricity sector to fulfill its critical role in decarbonizing the energy system,” says Birol. .