Europe’s power costs have been pushed through the roof by a supply crunch in natural gas, the risk of military conflict in Ukraine and bottlenecks for renewable energy. Compounding the problem, France’s aging nuclear reactors -- the backbone of the region’s power system -- are becoming more unreliable. Wary of the discontent and disruption that often results from soaring energy bills, governments have stepped in with measures to keep homes warm and factories running.
Benchmark European gas surged above 180 euros a megawatt-hour to a record on Dec. 21, compared with about 20 euros at the start of 2021. That’s because, although the omicron coronavirus variant had dampened some demand, there is pressure on energy supplies. Coal plants had been shuttered, stockpiles of gas -- a key fuel in European power stations -- were lower than normal and the continent’s increasing reliance on renewables was becoming a vulnerability. Power prices also climbed, with German year-ahead electricity and futures contracts for the first quarter of 2022 in the Nordic region also reaching records.