Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
By Angeliki Koutantou, Forrest Crellin and Edward McAllister
ATHENS/PARIS (Reuters) – For Athens restaurant proprietor Christos Kapetanakis, lease has at all times been excessive, however now he faces what he calls “a second lease” as hovering electrical energy payments slash earnings and pressure 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 vitality disaster. Electrical energy used to quantity to three% of month-to-month turnover and now it is extra like 15%, he stated.
“The continual enhance in costs, particularly within the tourism sector…will lead Greece to develop into much less aggressive in comparison with different Mediterranean nations,” he stated from his restaurant within the historic Plaka neighbourhood.
His predicament has been echoed throughout the continent because the Ukraine conflict interrupted Russian pipeline fuel provides to Europe and compelled nations like Greece to hunt costlier options.
However southeast Europe has felt the impression rather more than the northwest. Specialists say that can solely widen as winter hits, and may have a knock-on impact on financial progress.
Wholesale energy in Greece and Italy in August had been 12 occasions larger than in Nordic nations and even dwarfed different southern European nations which had been experiencing scorching climate.
HIGHEST IN THE EU
Since 2021, Greece has spent 11 billion euros on vitality subsidies to attempt to defend clients. In 2022, the spend amounted to five.3% of GDP – by far the best within the EU and double that of second-placed Italy, in line with France-based vitality consultancy Enerdata.
Regardless of Athens’ efforts to protect residents from the vitality 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.
“Elevated vitality costs and a adverse impression on GDP are a tautology,” stated Nikos Magginas, a senior economist at Greece’s Nationwide Financial institution.
“Elevated costs have a adverse impression on family consumption and on the fee construction for industries, airways and transport.”
A lot of the distinction between southeast Europe and its neighbours comes all the way down to funding. Whereas the northeast has energy and fuel traces that permit the straightforward switch of vitality between nations, in addition to a robust mixture of renewable sources, a lot of southeast Europe is fragmented and remoted.
Energy storage, which is turning into more and more vital 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 line with knowledge from LCP Delta, an Edinburgh-based energy consultancy.
“Southeast Europe and the Balkans are missing in (electrical energy) interconnects. Every time there’s a energy scarcity, and renewables output is low, they wrestle to import the mandatory volumes,” stated Henning Gloystein, head of vitality, local weather and assets at Eurasia Group.
In distinction, Spain’s renewable energy technology has skyrocketed up to now decade, partly due to EU funding. It generated virtually 60% of its electrical energy from renewable vitality within the first half of this yr, up from 51% a yr earlier than.
“When you do not make investments, vitality costs will keep excessive,” Gloystein stated.
MORE TO BE DONE
Europe’s energy community is in some ways an amazing success. In 2022, France elevated imports from Germany when nuclear energy output dipped. When Russian fuel provides to Europe through Ukraine had been halted final week, the value impression 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 shouldn’t be 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 – at the least 10 gigawatts of recent capability – to fulfill 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 goal is extra concretely to cut back costs, the best manner to do this is to extend penetration of renewables or nuclear,” stated Fabian Ronningen, an analyst at consultancy Rystad Vitality.
Whereas Greece has no nuclear vegetation, Aristotelis Aivaliotis, secretary basic of the Vitality Ministry, is upbeat, noting renewable output is on the rise, two new gas-fired energy vegetation set to return 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 costs will steadily fall … and this may positively get handed on to shoppers in some unspecified time in the future,” Aivaliotis advised Reuters.
Greek clients aren’t 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 youngsters to cut back their laptop computer and pill use to save lots of energy – a tricky ask for younger kids glued to their units.
“We’re on the verge of turning into a financially struggling household,” he stated. “The federal government wants to concentrate.”
($1 = 0.9730 euros)
