Lights out, heaters off: Europeans prepare for winter energy crisis after Russia turns off gas
Businesses set to shut down or take drastic measures to cut energy use
As Europe heads into winter in the throes of an energy crisis, offices are getting chillier. Statues and historic buildings are going dark. Bakers who can't afford to heat their ovens are talking about giving up, while fruit and vegetable growers face letting greenhouses stand idle.
In poorer eastern Europe, people are stocking up on firewood, while in wealthier Germany, the wait for an energy-saving heat pump can take half a year. And businesses don't know how much more they can cut back.
"We can't turn off the lights and make our guests sit in the dark," said Richard Kovacs, business development manager for Hungarian burger chain Zing Burger. The restaurants already run the grills no more than necessary and use motion detectors to turn off lights in storage, with some stores facing a 750 per cent increase in electricity bills since the beginning of the year.
With costs high and energy supplies tight, Europe is rolling out relief programs and plans to shake up electricity and natural gas markets as it prepares for rising energy use this winter. The question is whether it will be enough to avoid government-imposed rationing and rolling blackouts after Russia cut back natural gas needed to heat homes, run factories and generate electricity to a tenth of what it was before invading Ukraine.
Europe's dependence on Russian energy has turned the war into an energy and economic crisis, with prices rising to record highs in recent months and fluctuating wildly.
In response, governments have worked hard to find new supplies and conserve energy, with gas storage facilities now 86 per cent full ahead of the winter heating season — beating the goal of 80 per cent by November. They have committed to lower gas use by 15 per cent, meaning the Eiffel Tower will plunge into darkness over an hour earlier than normal while shops and buildings shut off lights at night or lower thermostats.
Europe's ability to get through the winter may ultimately depend on how cold it is and what happens in China. Shutdowns aimed at halting the spread of COVID-19 have idled large parts of China's economy and meant less competition for scarce energy supplies.
German Chancellor Olaf Scholz said this month that early preparations mean Europe's biggest economy is "now in a position in which we can go bravely and courageously into this winter, in which our country will withstand this."
"No one could have said that three, four, five months ago, or at the beginning of this year," he added.
Businesses could shut, some permanently
Even if there is gas this winter, high prices already are pushing people and businesses to use less and forcing some energy-intensive factories like glassmakers to close.
It's a decision also facing fruit and vegetable growers in the Netherlands who are key to Europe's winter food supply: shutter greenhouses or take a loss after costs skyrocketed for gas heating and electric light.
Bosch Growers, which grows green peppers and blackberries, has put up extra insulation, idled one greenhouse and experimented with lower temperatures. The cost? Smaller yields, blackberries taking longer to ripen, and potentially operating in the red to maintain customer relationships even at lower volumes.
"We want to stay on the market, not to ruin the reputation that we have developed over the years," said Wouter van den Bosch, the sixth generation of his family to help run the business. "We are in survival mode."
Kovacs, grower van den Bosch and bakers like Andreas Schmitt in Frankfurt, Germany, are facing the hard reality that conservation only goes so far.
Schmitt is heating fewer ovens at his 25 Cafe Ernst bakeries, running them longer to spare startup energy, narrowing his pastry selection to ensure ovens run full, and storing less dough to cut refrigeration costs. That might save five to 10 per cent off an energy bill that is set to more than triple from €300,000 ($395,610 Cdn) per year, to €1.1 million next year.
"It's not going to shift the world," he said. The bulk of his costs is "the energy required to get dough to bread, and that is a given quantity of energy."
Schmitt, head of the local bakers' guild, said some small bakeries are contemplating giving up. Government help will be key in the short term, he said, while a longer-term solution involves reforming energy markets themselves.
Governments scramble for supplies
Europe is targeting both, though the spending required may be unsustainable. Nations have allocated €500 billion to ease high utility bills since September 2021, according to an analysis from the Bruegel think tank in Brussels, and they are bailing out utilities that can't afford to buy gas to fulfil their contracts.
Governments have lined up additional gas supply from pipelines running to Norway and Azerbaijan and ramped up their purchase of expensive liquefied natural gas that comes by ship, largely from the U.S.
At the same time, the EU is weighing drastic interventions like taxing energy companies' windfall profits and revamping electricity markets so natural gas costs play less of a role in determining power prices.
But as countries scramble to replace Russian fossil fuels and even reactivate polluting coal-fired power plants, environmentalists and the EU itself say renewables are the way out long term.
Bargaining chip for Russia
Governments have dismissed Russia as an energy supplier but President Vladimir Putin still has leverage, analysts say. Some Russian gas is still flowing and a hard winter could undermine public support for Ukraine in some countries. There have already been protests in places like Czechia and Belgium.
"The market is very tight and every molecule counts," said Agata Loskot-Strachota, senior fellow for energy policy at the Center for Eastern Studies in Warsaw. "This is the leverage that Putin still has — that Europe would have to face disappointed or impoverished societies."
In Bulgaria, the poorest of the EU's 27 members, surging energy costs are forcing families to cut extra spending ahead of winter to ensure there is enough money to buy food and medicine.
More than a quarter of Bulgaria's seven million people can't afford to heat their home, according to EU statistics office Eurostat, the highest in the 27-nation bloc due to poorly insulated buildings and low incomes.