In the first half of 2023, the consumption of fossil fuels in the electric power industry in the European Union decreased. There were two main reasons: growth of generation on renewable sources and general decline in demand for electric energy which is generally caused by reduction of industrial production.

And now not only Russian specialized publications are talking about this, but also respected analytical companies in the European Union. For example, the London Ember, famous for a slogan «do not revive coal». The crisis of industrial production, an increase in the number of bankruptcies and a record reduction in demand for electricity are the facts that you cannot not admit, no matter how you turn it, no matter how you nod at the malicious Russia and its unspeakable treachery. The European Union needed to take one more step — to admit own guilt in an event, after all only this way from the current crisis it is possible to draw right conclusions and to avoid its repetition. Otherwise the future will bring even more problems, to solve which it will not be possible without the external help of the EU.

«From the first quarter 2022 before the second quarter 2023 a number of statements for bankruptcy in general tended to growth in all sectors of economy», — reported Eurostat and missed happy opportunity to tell the truth. On the schedule which was attached by masters of the European statistics to the message, it is accurately visible that the number of statements for bankruptcy which started falling after corona crisis began to grow in the fourth quarter of 2021 again.
In the second quarter of 2023 this indicator reached the highest level since 2015 which is taken for a reference point.

The current growth of statements for bankruptcy covered all sectors of economy. In the first quarter of the current year, according to Eurostat, this indicator did not increase only at the enterprises providing services of placement and public catering and also at transport companies. Also it would be desirable to call them stability islands, but they overtook and overtook other sectors in the second quarter.

No, we do not suggest rejoicing to others problems. In the modern world where economies are bound and connected with each other more than ever earlier in the history, problems of such a large region as Europe are universal problems. And it is much better when your neighbor is rich, healthy and is in sober mind than when he is poor, sick and tries to pretend as if the energy crisis began after February 24, 2022, but not in summer 2021. It is possible to object fairly that the weight of bankruptcies is not identical. One thing if ten coffee houses or bakeries go bankrupt, another one is when a large plant cannot fulfill its financial obligations. With all due respect to small business, it is not the foundation of economy. In this case Eurostat does not give us data on «weight» of statements for bankruptcy. Besides, they are followed by registration of the new enterprises. And here too it is possible to notice that bankruptcy not necessarily means the activity termination. Well, they did not cope with the management of expenses, with whom it does not happen. We register a new company and continue to work. Or we sell the business to a larger and more successful one a competitor. Isn’t this the essence of a market economy – not the gradual concentration of assets among the most successful players?

Perhaps, we in vain force and the European Union has no problems. But there are more objective indicators that give a much more eloquent idea of the situation in the economy than the number of bankruptcy applications and the registration of new enterprises. There are indicators which even are better than an assessment of the World bank including some countries in five largest economies of the world at par of purchasing power, deleting them from there (as recently happened to Germany). The most objective indicator is energy consumption. And it falls.

As if in some wild dream

The fact of decline in demand for gas in Europe is not a dispute subject. But the European Commission diligently pretends as if falling is not absolutely falling, and very much even operated process by means of which the Old World gets rid of the grown hateful dependence on the Russian gas.

We already noted that it is extremely difficult to believe in sincerity of such a position if to know volumes of decrease in demand for natural gas in the European Union at the very beginning of 2022. Already then it was possible to expect falling around 50 billion cubic meters. And the plan of the European authorities which had to reduce consumption in the same volumes started being implemented since August 1, 2022.

As expected, the plan was not curtailed on March 31, 2023. It was prolonged for a year. That is the European Commission intends to pretend that operates consumption of natural gas till April 1, 2024.

It is interesting that according to the International Power Agency (IPA) which was published in the first quarter of the current year, the industry of Europe in 2022 missed 30 billion cubic meters of gas (from cumulative falling in the EU and Great Britain on 70 billion cubic meters), but in 2023 it had to win back 10 billion cubic meters from this volume. There is no wish to disappoint, but it is already possible to call this forecast failure.

It is worth using relative indicators which are published, for example, by Bruegel, relying on ENTSOG statistics. Then it will turn out that in comparison with an average value for 2019-2021 in the 2022 consumption of gas in the European Union fell to 12%, and in Great Britain — for 9%. In the first quarter of the current year the same indicators decreased respectively by 18% and 16%, and in the second in both cases — for 19%. If to speak in absolute measures, falling for the first eight months of the current year besides to the period of last year reached 26 billion cubic meters.

But, maybe, the matter is in warm weather thanks to which less heat and the electric power was required. Or perhaps solar and wind power stations in 2023 were especially productive and natural gas started losing to the renewables (R) in competitive fight. We would be ready to agree with these arguments. Especially as there is some basis under them. But they do not explain statistics in an industrial segment in any way.

In 2022 (rather average values for 2019-2021), according to Bruegel, the industry of the European Union reduced consumption of natural gas by 15% and British — for 44%, in the first quarter of the current year — for 19% and 52% respectively and in the second quarter — for 21% and 61%. It becomes disturbing for the British industry. Such a falling cannot be explained only with transition to any alternatives (it seems propane-butane).

And if to impose these data on movement of the countries in a rating of the largest economies if to add here indicators of bankruptcies, the situation is sad. Our neighbor is obviously unhealthy. And no matter his illness turns into a global economic «pandemic».

There is another power indicator which places all the dots over «i». It is electricity consumption.

People are amused

At the beginning of the current year IPA expected that the European demand for natural gas will start giving as the French atom had to regain consciousness and grow up a share of RES. At the same time the German management decided on a final stop of the nuclear power plants. Thus in medium-term prospect in Germany growth of the generation working at gas but ready to transition to hydrogen was assumed.

And hydrogen strategy fails, as there are not enough companies which are ready to invest in it. Victorious reports about the incredible growth of producers of electrolyzers and electrolysis capacities should be accompanied with specifications that was expected more and for a victory of the green future money is necessary. Do not hide your money on pots and corners.

Whether it is worth being surprised that the companies do not queue to invest in H2-ready-power plants, especially as many of these companies quite recently incredibly strongly burned on gas.

Energy companies actively invested money in gas power plants. But the end of the 2000s came, and prospects of «the Golden Age of gas» were covered by fog of a world economic crisis. And then the European Union began to reform energy market, sincerely trying to make as better — to strengthen power safety, to reduce dependence on import energy resources and to create growth points for the industry. So, various measures of support were taken for the electric generation working at renewable sources.
One of the tools that ensured the rapid growth of renewable energy in the European Union was priority access to networks. As soon as a wind, solar or other RES-powered power plant started producing electricity, the networks were obliged to accept this electricity. In this way, renewable energy was protected from the traditional generation dominating the installed capacity of European power plants. And investments in the green segment became more and more attractive.

It would perfectly work on a growing market, but not in the European Union of a sample of the first half of the 2010s when it was impossible to speak about overcoming of consequences of world crisis.

One of the consequences of the crisis was the stagnation in the European electric power industry, demand practically did not change. This, in turn, led to the fact that the increase in the production of green generation led to a decrease in the economic indicators of gas-fired power plants. Electricity is a special commodity that is produced and consumed at the moment when it becomes necessary. The currently available tools for the accumulation of electrical energy do not cancel this principle, since they affect the vanishingly small volume produced. Yes, in 2016 the power of large network stores made less than 1 GW and in 2022 it stepped over a mark of 11 GW. It is improbable growth. But it is insignificant size against the rated capacity of power plants in power supply systems which stores should serve.

There were published optimistic forecasts, according to which, the more accumulators, the less expense. We have already seen how good such forecasts are, using the example of the price crisis in the lithium market, which led to an increase in the price of batteries. Whether multiple increases in demand for lithium, nickel, cobalt and other metals can to lead to price jumps is no more than a rhetorical question as the answer to it is extremely obvious.

Meanwhile we can remind of the forecast of Wood Mackenzie according to which the cumulative power of network stores will increase by 2031 more than by 45 times — to 500 GW only. By the way, the volume of such drives is now more than an order of magnitude inferior a similar indicator in electric transport, which is also predicted to have a cloudless future and multiple growths. Amazingly, but even the western editions try to pay attention of responsible persons to the simple fact: «accumulator race» needs revolution of technologies of utilization. Otherwise during fight for ecology it is possible to dirty the whole planet with a thick layer of the fulfilled batteries. Partly the future problems which are visible in the field of network stores already today, try to solve by means of hydrogen power. For example, the European Union in 2020 accepted strategy which means that production of so-called green hydrogen, that is received thanks to electrolysis of water with use of the electric power made from renewable sources will be developed in the region. It, of course, is cheaper than to put accumulators. More precisely, it would be cheaper if did not demand creation of new production and gas transmission capacities, and also means of storage and the equipment for hydrogen use. For example, power plants at new gas power plants. By the way, some words about them.

They beat the old gods

In the 2010s in the European power supply system, the large renewable segment which produced electricity uncontrollably, moreover, it was necessary to accept this electricity because of the requirements of the legislation was formed. It was necessary to reduce production at power plants that do not have priority access. Gas power plants are easiest to maneuver. And the more electricity there was from RES in the growing market, the more painful maneuvers were on a gas segment. And these blows had quite concrete economic measurement. Such companies as E.ON and RWE have had to close recently commissioned gas power plants. In the middle of the 2010s there began a small, but still, increase in demand for electrical energy in the EU. In addition, Germany began to close nuclear power plants, which opened up a sales market for gas generation. At the same time, the European Union decided to abandon coal-fired power plants, which also contributed to the restoration and strengthening of the gas segment. If in 2015 gas power plants provided the production of 213.36 TW h, or 9.2% of all electricity produced in the EU, then at the peak, which occurred in 2019, these figures rose to 456.88 TW h (17.8 %). And here we approach by crisis 2022 when the gas generation of the European Union, despite price pressure and the fall in total demand for electrical energy, developed 436.11 TW h (17.7%), besides the cumulative decline in demand and productions by the European power plants was huge. In 2021 this indicator reached 2557.69 TW h and in 2022 was reduced to 2464.95 TW h. Colleagues were greatly led down by French nuclear power plants. France is a large exporter of electric energy. In relative sizes the contribution of its foreign deliveries can seem not really impressive (about 1.5% of cumulative demand). But this is electricity, which helps cope with sudden changes, therefore, although its hare is small, its absence can have a more than noticeable impact on European market. If in 2021 the French nuclear power plants made 359.53 TW h electric energy made 70.8% of total volume, by 2022 this indicator fell to 278 TW h (65%). Decrease was caused by purely technical difficulties which the NPPs faced. Besides difficulties concerned as stations (some of them had to be stopped because of the risks connected with further operation of nuclear part), and weather conditions (cooling process was broken). Fortunately, big problems managed to be avoided thanks to decline in demand in scales of the EU.

It is interesting that in 2022 the European Union decided to enter the NPP into «a green pantheon», and gas generation to recognize as a power source of a transition period (that is partially green). Coordination of this norm was followed by a quantity of disputes between representatives of Germany and France, but noticeable impact on the «green» status of the NPP and gas these disputes did not render.

It is worth understanding that at all contradictions of the largest economies of Europe and at all seeming formality of green taxonomy it makes direct impact on economy of the whole countries. In many respects tax burden of goods from a big power component in prime cost will depend on it. Also basic opportunity to invest in power plants of this or that type depends on it.

And it’s not just that France, which is incredibly dependent on nuclear power plants, is interested in nuclear power plants having a “green” status and not only that Germany, which decided to increase a share of gas generation, is interested in removing any obstacles to investment in gas. The point is also that European coal power plants, after a certain renaissance, will be closed in 2021–2022.

People pray

The analytical company Ember (London) which was earlier urging «not to revive coal» following the results of last year was delivered a joyful report: «In 2022 emissions will reach peak, the new era of decrease in emissions in the energy sector is close». Listing prerequisites for so epoch-making event, it noted that «growth of pure power probably will exceed increase in demand for the electric power in 2023 «. There was also brought essential specification: «It will be the first year when this event occurs out of the recession period».

It is impossible to tell that it is the first time when reputable European analysts declare «a new era of decrease in emissions in the energy sector». But it is the first time when they mention economic difficulties as one of the major factors influencing pseudo-ecological achievements of power industry of last years.

A team of reputable experts, on the one hand, are supported with the got prettier world statistics on emissions of carbon dioxide by power plants (436 g of CO2 on 1 kW · h — the lowest result in the history), and with another, they ignore obvious problems of large economies like Europe and growth of efficiency of traditional electric generation. At such approach it is easy to praise only one party — wind and solar power stations, emphasizing that they accounted for as much as 12% of global electricity generation in 2022.
What would be the indicators but for the problems of world economy and not a failure of demand in the European Union? What indicators of emissions if China and Russia did not reduce specific consumption of fuel for electricity generation were and would not reduce emissions at traditional power plants? Answers to these questions are not interesting to the researchers from London at all. Although they also give indirect answers, noting that only specific indicators decreased, but overall emissions in the electricity sector increased by 1.3%, as global demand for electricity increased, and with it production.

Especially ironically looks a fact that in 2022 production of electric energy from coal increased by 1.1%. It is an average value for the last decade therefore it is easy to tell that no revival of coal happened, terms of refusal of this type of generation simply moved. But the only one reason, for which demand for coal did not exceed average values, consists in economic problems of Europe. As, for example, China actively replaced with coal gas in power industry.

By the way, the European researchers have been burying coal since 2020. And the states of the European Union entirely support refusal of this energy carrier. But in 2022 there was the smallest number of closings of coal power plants for seven years. And in some places (located mainly in Europe) earlier closed power plants had to be restarted.
Besides European «coal revival» began till February 24, 2022. For example, the authorities of France gave out temporary permission to coal power plants to burn more fuel that the country avoided deficiency of the electric power. And it happened in the first week of February. But who, except us, will remember now such trifles. The European Commission said that there was no crisis in Ukraine before the conflict began, which means that it most certainly did not exist. This is how democracy and freedom of speech work.

By the way, in August of the current year the EDF Company warned the leadership of France that production of electric energy on the NPP in winter months, most likely, will appear below seasonal norm. Paris had to give out permission to burning of bigger amount of coal again. Just in case. Especially as the statistics gives reasons for concern: for not the most successful first half of 2022 in their history the NPP of the European Union made 305.53 TW · h and for the similar period of the current year – 293.64 TW · h.

The main falling was a share of Germany.

But galvanization of coal power industry of Europe does not mean that the authorities of the EU decided not to refuse the reliable and checked in a crisis situation energy carrier. The main question that European politicians are asking themselves today is what will replace coal power plants.

Waiting for just words

Of course, the main applicants are the wind and the sun. But while neither ordinary accumulators, nor hydrogen «battery» are not ready to become a base of stability of deliveries of the electric power, it is necessary to choose also some more checked options.

Some states of the EU stake on atom. Besides they not always go an obvious way. So, a number of the Polish companies concluded the memorandum of understanding with Westinghouse about potentially possible construction of six power units of AP1000 both in the Poland, and in neighboring countries, so far neither Westinghouse, nor her Polish partners do not specify time frames when the noncommittal agreement develops into the real project.

At the same time Poland expands gas transmission corridors available to it at the expense of Baltic Pipe and the terminal for reception of the liquefied natural gas in Gdansk, so, not only NPPs will go to replace coal in this country.

There are, of course, governments, extremely confident in the «green» correctness, like the Spanish which refused to reconsider terms of closing of nuclear power plants in the country despite official requests of the profile organizations. Closing is planned for 2030.

And here Belgium intending with some not clear purpose to close the NPP in 2025 corrected the plans and postponed closing for 10 years.

But Germany went the furthest, which, after some delays, still stopped the last nuclear reactors operating in the country at the beginning of the second quarter of this year. It increased dependence of power supply of Germany on good will and reliability of electric generation of neighboring states. And they (see France) can have some failures in a heating season. But, if to trust Berlin, this dependence will be short as legislative «gardening» of gas at the level of the European Union opens the most ample opportunities for investments into the power plants working at natural gas but ready to switching on hydrogen which will captivate the EU market sometime in the future.

In order to attract investment in gas generation, German government has not only general wishes for a “green” taxonomy but also its own legislative framework. And, on the one hand, in the first half of 2023 in Greece, Italy, Ireland, Poland, Great Britain and Germany in a stage of construction or commissioning there were nearly 10 GW of gas power plants. On the other hand, the task which is set by German government is to increase the rated capacity of gas power plants within a decade by 17-21 GW. To understand the scale, Germany now has about 32 GW and in 2022 a total of 31 GW of new gas power plants were commissioned worldwide (the lowest figure in 18 years). Expansion of gas capacities allegedly will allow Germany to balance a power supply system in which by the beginning of the 2030s of 80% of the electric power will be made from renewable sources, and coal will disappear at all. But the companies taught by bitter experience of the 2010s which have heard plenty of convincing forecasts about «the Golden Age of gas», do not hurry to invest money in new gas generation, especially as at the expense of a hydrogen component will be more expensive than usual. However, the European hydrogen does not burst from investments too. Nevertheless both the NPP and natural gas are more than reasonable options to prop up the unsteady building of RES. As for renewable, that, according to Platts, in Western Europe capacities of wind and solar generation will grow from 292 GW in 2020 to 487 GW in 2025 and to 818 GW in 2030, while capacities of gas and coal generation will decrease from 215 GW in 2020 to 199 GW in 2025 and to 133 GW in 2030. This assessment is interesting to that on some strange combination of circumstances power plants which rated capacity are going to increase (gas), and what intend to refuse (coal) unite here.

Platts specifies that in the next three years the rated capacity of gas power plants will grow by 5 GW, and in the next three years will be reduced by 20 GW (in Western Europe). By 2050, according to this forecast, only 15 GW of gas power plants will be involved in the region. Most likely, transfer of the others to hydrogen is meant.

We do not know who we are

And all these plans and forecasts look extremely convincing if not for two “buts”. The first: all of them make sense in conditions when the European hydrogen strategy reaches the planned indicators (and the system thus works). The second: the economic crisis and decline in demand for the electric power depreciates the most part of «green» efforts and reduces investment appeal of the energy sector.

At the end of 2022 it was possible to declare something it seems: «The end of the fossil age begins in this climate-defining decade. We enter an era of pure power. To a wind and the sun conditions for prompt take-off on top are created. The environmentally friendly electricity will change world economy, from transport to the industry and beyond its limits» (Malgozhata Viatros-Motyka, the Senior Analyst on Power Industry of Ember Company).

Apparently from forecasts of IPA and Ember, by beginning of current year Europe was optimistic. Many experts safely declared that crisis ended, the EU and Great Britain resisted (though nobody expected their falling and in this direction nobody worked).

Decrease in gas quotations strengthened Europeans in opinion that the most difficult is behind. But the results of the first half of the year dispelled this delusion. Demand of electric power in the EU fell by 5%. An anti-record was set for the last 15 years – 1261 TW h. That is the indicator fell below the pandemic minimum of 2020 (to 1271 TW h). Fossil power sources provided only a third of the given demand (410 TVT · h — a minimum for all history of observations).

Isn’t there a reason to rejoice for progress of the sun and a wind? No, it is not the reason as the European analysts should recognize that «reduction of consumption of fossil fuel is caused mainly by considerable decline in demand for the electric power against steadily high prices of energy carriers and reductions of industrial production». That is the last year’s forecast meaning lack of recession in 2023rd was more than optimistic.

Here it is interesting that problem of the European industry is not news at all. And even IPA connects two thirds of decrease in demand for electric energy last year with factors which do not depend on weather in any way, and mainly — with reduction in production in power-intensive industries. But this recognition moves rather as great success of the EU leaders in its fight against crisis.

In turn, Ember notes that decline in demand for the electric power in 2022 in an industrial segment was especially sharp in Germany. Production in power-intensive branches fell to 15-20% in comparison with an average value of 2021. Such countries as Italy, France, Spain, Poland and the Netherlands did not avoid it either.
Simply it was expected that 2023 will bring positive changes. And it has not brought.

Let’s notice that practice of association of all minerals under one sign is vicious as does not allow seeing the whole picture. The main falling of development in the first half of the year was a share of coal power plants. Reduction in a gas segment made only 2.5%. And it seems as leaving of coal in medium-term prospect from the European power supply system opens opportunities for gas too, but the problem is in demand and economic capacity of Europe.

The abandonment of coal-fired power generation in Europe is getting closer, and we need to invest money now not only in renewable energy sources, but also in blue fuel. And it will be difficult to do this in conditions of falling demand, when the sun and wind still have priority access to the networks and having not yet fully emerged from one energy crisis, Europe risks falling into a new one.

Under no circumstances should you look for any kind of gloating here. Let us emphasize once again that it is desirable for your neighbor to be rich, healthy and sane and not poor, sick and naively believing that renewable energy sources will solve all his problems.