Quicktake

Why Europe Is Crippled By a Wartime Energy Crisis: QuickTake

EU Eyes 140 Billion Euros From Power Producer Revenue Cap
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Mothballed coal-fired power stations are cranking back to life in Europe as utilities try to keep the lights on after Russia choked off supplies of natural gas. Even before Vladimir Putin’s invasion of Ukraine, the region was rocked by a series of supply disruptions that revealed the vulnerabilities of an energy system that’s become more reliant on intermittent wind and solar power in recent years. While the race to avoid winter blackouts and a deep recession requires a return to dirtier fuel sources for now, the crisis is also spurring European leaders to accelerate the longer-term shift to renewables.

Europe’s vulnerability was laid bare by an unexpected chain of events: After an unusually cold and long winter in 2020-2021, the post-pandemic recovery led to higher demand for energy. That coincided with weather patterns creating unusually low wind speeds that cut output from wind turbines, all at a time when natural gas was in short supply. As a result, electricity prices more than tripled in the second half of 2021. Then in February 2022, Russia’s military campaign triggered sanctions against Moscow. Putin hit back by weaponizing natural gas flows to his neighbors. He began to turn the screws by restricting flows in April. By the end of July, the prospect of a complete collapse of Russian supplies was looking increasingly likely.