Europe’s largest Russian gas buyers are rushing to find alternative fuel supplies and could burn more coal to deal with reduced gas flows from Russia that threaten an energy crisis over the winter if stores are not replenished.
Germany, Italy, Austria, and the Netherlands have all indicated that coal-fired power plants could help the continent through a crisis that has pushed gas prices up and added to the challenge for policymakers to fight inflation.
The Dutch government said Monday it will lift a production cap at coal-fired power plants and activate the first phase of an energy crisis plan.
Denmark has also embarked on the first step of a gas contingency plan due to uncertainty over Russian supplies.
Italy moved closer to declaring a state of energy alert after oil company Eni said it had been told by Russia’s Gazprom it would receive only part of its gas supply request on Monday.
Germany, which has also faced lower Russian flows, announced its latest plan to increase gas storage levels and said it could restart coal-fired power plants it had wanted to phase out.
“That’s painful, but in this situation, it is a sheer necessity to reduce gas consumption,” said Economy Minister Robert Habeck, a Green Party member who has pushed for a faster exit from coal, which produces more greenhouse gases.
“But if we don’t do it, we run the risk that the sheds will not be full enough at the end of the year towards the winter season. And then we are blackmailed at a political level,” he said.
Russia on Monday reiterated its earlier criticism that Europe only blamed itself after countries imposed sanctions in response to Russia’s invasion of Ukraine, a gas transit route to Europe and a major wheat exporter.
The Dutch first-month gas contract, the European benchmark, traded at around €124 per megawatt-hour (MWh) on Monday, down from this year’s peak of €335 but still more than 300 percent higher than a year ago.
Markus Krebber, CEO of RWE, Germany’s largest energy producer, said it could take three to five years for power prices to fall back to lower levels.
Russian gas flows to Germany via the Nord Stream 1 pipeline, the main route supplying Europe’s largest economy, were still running at about 40 percent capacity on Monday. However, they had risen since the beginning of last week.
Ukraine said its pipelines could help fill any supply gap through Nord Stream 1.
Russia has previously said it can no longer pump through the pipelines Ukraine has not already shut down.
Eni and German utility Uniper were among the European companies that said they were receiving less than contracted Russian gas volumes. However, European gas supplies are still filling – albeit more slowly.
They were about 54 percent full on Monday against a European Union target of 80 percent in October and 90 percent in November.
Germany’s economy ministry said cutting coal-fired power plants could add up to 10 gigawatts of capacity if gas supplies reach critical levels.
A law regarding the move will go to the Senate on 8 July.
In addition to a shift to coal, the latest German measures include an auction system to encourage industry to use less gas and financial aid for the German gas market operator, through state lender KfW, to fill the gas storage faster.
RWE said Monday it could extend the operation of three 300 megawatts (MW) lignite plants if needed.
The Austrian government on Sunday agreed with utility company Verbund to convert a gas-fired power station to coal if the country faces an energy crisis.
OMV said on Monday that Austria would receive half the usual amount of gas for a second day.
