By Angeliki Koutantou, Forrest Crellin and Edward McAllister
ATHENS/PARIS (Reuters) – For Athens restaurant proprietor Christos Kapetanakis, hire has at all times been excessive, however now he faces what he calls “a second rent” as hovering electrical energy payments slash income and power him to boost costs.
Kapetanakis pays between 3,000 and three,800 euros ($3,083-$3,905) a month on energy, up 40% since Russia invaded Ukraine in 2022 and triggered a European power disaster. used to quantity to three% of month-to-month turnover and now it is extra like 15%, he mentioned.
“The continuous increase in prices, especially in the tourism sector…will lead Greece to become less competitive compared to other Mediterranean countries,” he mentioned from his restaurant within the historic Plaka neighbourhood.
His predicament has been echoed throughout the continent because the Ukraine warfare interrupted Russian pipeline gasoline provides to Europe and compelled nations like Greece to hunt dearer options.
However southeast Europe has felt the affect rather more than the northwest. Consultants say that may solely widen as winter hits, and could have a knock-on impact on financial development.
Wholesale energy in Greece and Italy in August have been 12 occasions larger than in Nordic nations and even dwarfed different southern European nations which have been experiencing scorching climate.
HIGHEST IN THE EU
Since 2021, Greece has spent 11 billion euros on power subsidies to attempt to shield clients. In 2022, the spend amounted to five.3% of GDP – by far the very best within the EU and double that of second-placed Italy, in keeping with France-based power consultancy Enerdata.
Regardless of Athens’ efforts to protect residents from the power value rises, the state of affairs has exacerbated a price of dwelling disaster in Greece within the wake of a 2009-18 debt disaster that slashed wages, pensions, and investments in energy manufacturing and transport.
“Increased energy prices and a negative impact on GDP are a tautology,” mentioned Nikos Magginas, a senior economist at Greece’s Nationwide Financial institution.
“Increased prices have a negative impact on household consumption and on the cost structure for industries, airlines and shipping.”
A lot of the distinction between southeast Europe and its neighbours comes all the way down to funding. Whereas the northeast has energy and gasoline strains that enable the straightforward switch of power between nations, in addition to a powerful mixture of renewable sources, a lot of southeast Europe is fragmented and remoted.
Energy storage, which is turning into more and more necessary in northern European nations, is nonexistent in components of the southeast. Germany has 1,668 megawatts (MW) of large-scale storage capability, versus none in mainland Greece, in keeping with information from LCP Delta, an Edinburgh-based energy consultancy.
“Southeast Europe and the Balkans are lacking in (electricity) interconnects. Whenever there is a power shortage, and renewables output is low, they struggle to import the necessary volumes,” mentioned Henning Gloystein, head of power, local weather and assets at Eurasia Group.
In distinction, Spain’s renewable energy technology has skyrocketed up to now decade, partially because of EU funding. It generated nearly 60% of its electrical energy from renewable power within the first half of this yr, up from 51% a yr earlier than.
“If you don’t invest, energy prices will stay high,” Gloystein mentioned.
MORE TO BE DONE
Europe’s energy community is in some ways an ideal success. In 2022, France elevated imports from Germany when nuclear energy output dipped. When Russian gasoline provides to Europe through Ukraine have been halted final week, the value affect was muted as a result of the bloc had discovered options.
However for some, extra must be carried out. After energy costs spiked in Greece final summer time, Prime Minister Kyriakos Mitsotakis wrote to the European Fee demanding an answer to the “unacceptable” variations in electrical energy prices throughout Europe.
Greece isn’t alone. A lot of the Balkans depends closely on fossil fuels and the regional energy system is weak. Final June, an influence outage hit Montenegro, Bosnia, Albania and Croatia when the grid was overloaded by air con wants throughout a heatwave.
Kosovo, which generates greater than 90% of its energy from coal, is struggling to meet up with the remainder of Europe in putting in extra renewables.
In December, it launched an public sale to put in 100 MW of wind capability. However the World Financial institution estimates that it wants 100 occasions that – a minimum of 10 gigawatts of latest capability – to satisfy its goal of eliminating coal utilization by 2050. This transition is estimated to value Kosovo 4.5 billion euros, a frightening sum for the small economic system.
With out sufficient cross-border integration or storage, generally there’s an excessive amount of energy for one market, forcing producers to curtail provide.
“If the target is more concretely to reduce prices, the easiest way to do that is to increase penetration of renewables or nuclear,” mentioned Fabian Ronningen, an analyst at consultancy Rystad Vitality.
Whereas Greece has no nuclear crops, Aristotelis Aivaliotis, secretary normal of the Vitality Ministry, is upbeat, noting renewable output is on the rise, two new gas-fired energy crops set to come back on-line this yr, and battery storage to be constructed by 2028.
Plans additionally name for energy hyperlinks with Italy, Albania and Turkey to be upgraded by 2031 at a price of about 750 million euros.
“Wholesale prices will gradually fall … and this will definitely get passed on to consumers at some point,” Aivaliotis informed Reuters.
Greek clients should not satisfied. Taxiarchis Fekas, who lives in a suburb of Athens, struggles to pay college tuition and allowances for his three kids as a result of energy payments are so excessive.
He urges his children to scale back their laptop computer and pill use to avoid wasting energy – a troublesome ask for younger kids glued to their gadgets.
“We are on the verge of becoming a financially struggling family,” he mentioned. “The government needs to pay attention.”
($1 = 0.9730 euros)
