New investment opportunities to alleviate the energy crisis (EN/FR)
-------French Version Below-------
I- Energy crisis is penetrating the daily energy consumption
The cause of energy shortage
Since the breakout of the conflict between Russia and Ukraine, the EU claimed that it would stop buying all Russian crude oil delivered by sea - or ⅔ of all EU imports of Russian crude - from early December under sanctions imposed on Russia. To counter the sanctions, Russia has cut the gas supply to Europe by closing the gas pipeline, the Nord Stream 1, which is owned and operated by the Russian state-owned company Gazprom. According to the BBC news, this pipeline covers 35% of all the gas that EU states import from Russia. The pipeline closure has put political pressure on Europe, especially Germany. The pressure expands since the EU imports nearly 40% of its gas and 25% of its oil from Russia referring to the figure below. The scale of the negative impact is fatal because gas and oil account for nearly 60% of energy consumption in Europe.
Source: 《BP Statistical Review of World Energy 2022》
b. Consequence: the increase in energy price
Since July 2021, European gas prices have increased by 145% while oil prices have increased by 46% over the same period. The increase in primary energy prices contribute to record-high wholesale electricity prices, in particular as electricity prices in Europe are indexed on gas prices. The conflict between Russia and Ukraine is a driver of volatility in energy commodity prices. In addition, the low levels of inventories have made prices more sensitive to changes in energy supply and demand.
Source: Eurostat, Refinitiv and ECB staff calculations
II- REPowerEU is enacting policies and injecting capital into energy transformation
On May 18 2022, the European Commission presented the REPowerEU Plan as a response to the global energy market disruption. It raised the urgency to end the EU’s dependence on Russian fossil fuels and cope with the climate crisis. There are three main strategies: saving energy, diversifying energy imports, and accelerating clean energy transition. To support REPowerEU objectives, €225 billion is already available in loans under the RRF. To reach targets of 40/45% of energy production from renewables, €210 billion needs to be invested between now and 2027. Under the current MFF, cohesion policy will already support decarbonisation and green transition projects with up to €100 billion by investing in renewable energy, hydrogen and infrastructure.
Source: The REPowerEU Plan
III- Two potential solutions with economical and environmentally-friendly benefits: Heat Pump and Household Energy Storage Systems
a. The necessity to reduce energy consumption from house heating.
To fight against energy dependance in particular to Russia as explained in the introduction, Europeans should reduce their personal consumption. One main pillar of energy consumption for individuals is house heating.
Research is ongoing to find solutions to find new house heating systems capable of reducing drastically energy consumption.
The following paragraphs aim at giving insights on possible technological solutions which have been identified to potentially help European households to reduce their consumption.
b. Heat Pump
> How do heat pumps work?
A heat pump extracts warmth from outside air, the ground or a nearby source of water to generate electricity using evaporative cooling. The technology is mature, which is applied in air conditioners and fridges.
Source: DW.com
> The economic and environmental benefits
Less energy consumption: The electricity consumption of air source heat pumps is only about 1/3 of that of air conditioners in daily household heating and cooling.
Cheaper electricity bills: Lower energy consumption leads to a proportional decrease in the electricity bills.