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    It's neither over nor have we seen the worst: electricity prices will continue to soar for 3-5 years

    January 20, 2023 - CE Noticias Financieras


      The worst is not over yet. Neither inflation, nor the vertiginous prices we are suffering in energy products. The analyses of the main experts in the sector predict between 3 and 5 years of high gas and electricity prices, with peaks not yet contemplated to date.

      Pedro Mielgo, former president of Red Eléctrica and current president of Madrileña de Gas and NGC Partners, was so categorical during the informative breakfast held at Libertad Digital to analyze the energy problems we are suffering, with high supply prices and policies aimed at reducing demand, rather than implementing solutions to obtain abundant and cheap energy.

      In addition to Mielgo, Libertad Digital counted on its other two leading experts in this field, the World Engineering Prize (equivalent to the Nobel Prize in Engineering), María Teresa Estevan Bolea, and the doctor in nuclear physics and energy disseminator Manuel Fernández Ordóñez, with the aim of analyzing the problems we are experiencing, their origin and the possible solutions that can be proposed.

      The most obvious is the price crisis we are suffering in Europe. It is no coincidence that the price paid by Spaniards for electricity and gas energy supplies has more than doubled in the last year and a half. The decisions of the international community on the reduction of CO2 emissions with the decarbonization of the economy are largely to blame, as they have stressed the demand for gas causing its sudden rise in price since the summer of 2021 (long before Putin's war).

      Our experts point to the fight against climate change as one of the original sins of the West that have caused the crisis we are suffering. Basically, climate policies that, as Estevan Bolea recalled, have nothing to do with the nature of the periods related to the climate on our planet and that have been altering cold periods with warm periods over hundreds and thousands of years. "To believe that man has the capacity to alter these cycles is absurd," he said.

      Not only that. Manuel Fernández Ordóñez added an almost greater absurdity, and that is to meet the decarbonization targets for 2050, i.e., 0 emissions in that year would mean installing 1.5 million solar panels every day for the next 11 years. Or build a nuclear power plant every 19 days for the next 11 years. In other words, an absurdity.

      However, CO2 emission taxes not only continue to make energy more expensive, but have increased tenfold in the last 5 years.

      What awaits us in 2023?

      Mielgo made the short- and long-term analysis. "All decisions taken in the energy sector are long term" and "to think that in 2 weeks we are going to fix forty years of energy policy blunders is naive," he complained. One of these blunders is that "in the last forty years no foresight studies have been carried out to define an energy mix and, therefore, a long-term energy policy that defines what type of energy we want in the future. Only a draft was made in 2009 and before that, in 2007, a study presented by UNESPA".

      Mielgo's thesis is simple to understand: the price crisis we are suffering is due "fundamentally to gas. There are problems of shortages and there are problems of energy poverty due to gas." The policies that have been put in place in Europe to eliminate Russian gas supplies imply de facto a significant increase in the volume of the world Liquefied Natural Gas (LNG) market. "That requires building new liquefaction capacities in many countries, new regasification capacities in producing countries, a resizing of the LNG carrier fleet, pipelines to modify internal gas transport routes and rethinking maritime routes to meet growing demand and all this, being optimistic, takes between 3 and 5 years. This is pure mathematics." This means that for the next 3-5 years we are going to suffer high energy prices. What we have after those five years, "is going to depend on what we do now," warned Mielgo.

      Manuel Fernández Ordóñez, recalled that the increase in gas demand this year and next year is of great concern for the reasons indicated by Mielgo and pointed out that some analyses indicate that next winter the gas supply will not cover the demand.

      Finally, Mielgo recalled that in 2023 the threat of expensive prices is very strong, as stated by the executive director of the International Energy Agency Fatih Birol, who said that we could get through this winter, but that next winter will be much harder. A statement that was repeated shortly afterwards by Von der Layen.


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