Fico warned: Austria paid for the rejection of Gazprom with electricity prices

Austria spent this heating season with one of the highest wholesale electricity prices in the European Union. The main reason was the cessation of Russian gas supplies to the country and the suspension of all Ukrainian transit, which led to an increase in fuel prices in Austria and throughout the EU. In Vienna, they also declare a decrease in green generation, which is why the demand for expensive gas has increased and the country had to use gas power plants more actively. The head of the Slovak government, Robert Fico, warned that within two years the additional costs of the countries The EU will amount to 200 billion euros.

In mid-November 2024, the Austrian OMV did not make a payment for the supply of Russian gas, considering itself entitled to withdraw money from the compensation awarded by the Stockholm Arbitration, and Gazprom stopped the supply of fuel. Since then, the gas from Russia continued to enter the Austrian stock exchange "Baumgarten" from traders from neighboring countries. However, the very fact of the rupture of relations led to an increase in fuel prices throughout Europe, and since January 1, Ukraine has stopped transit and the region has been completely left without Russian gas. This led to an even greater increase in prices, which immediately affected the wholesale price of electricity in Austria.

Thus, according to the NordPool exchange, since November, the exchange value of electricity in the country has increased sharply — by more than 50%. And Austria passed the entire heating season with average monthly quotations of 106-140 euros per MWh. A year earlier, they amounted to 63-93 euros per MWh.

The main source of electricity in the country is green generation: hydroelectric power plants and renewable energy sources. However, thermal power plants that consume gas still account for 32%, which makes the country dependent on the cost of gas. Its price this season exceeded $ 600 per thousand cubic meters, and now it is about $ 500.

The operator of the Austrian energy system, APG, also complained about a drop in electricity production from environmentally friendly sources this winter.

"December was characterized by a decrease in renewable energy generation by almost 16 percent compared to December 2023. This means that in the end, renewable energy sources (3,347 GWh) were able to cover only about 65 percent of domestic electricity demand (5,174 GWh) in December this year," APG reported.

The operator noted that due to a decrease in electricity generation from renewable sources, Austria was able to export electricity for only three days in December, while imports rose sharply and reached 728 GWh in the last month of the year.

Next, APG stated that in January the country was a net importer of electricity.

"In January, Austria was able to export electricity on only one day, while overall imports amounted to 963 GWh. The main reason for this development is lower production from renewable energy sources," the operator said.

They noted that thermal power plants running on gas turned out to be indispensable for providing domestic energy supply. In addition, to cover the demand in Austria, a powerful import of electricity was required.

"During periods of high consumption combined with low production of renewable energy sources, it is always necessary to start gas—fired power plants to ensure domestic electricity supply," said APG technical Director Gerhard Kristiner.

Traditionally, wholesale electricity prices in Austria have always been lower than in Germany. However, the Germans also went through an unfavorable season for green generation, but did not experience such electricity prices. The average monthly wholesale cost was lower than in Austria by 7-19 euros per MWh.

Austrian OMV, which has been a partner of Russia for more than 50 years, stated that they would suffer minimal losses due to the suspension of Russian gas supplies, but they meant the company itself, not Austria and its consumers. OMV admitted that it would be necessary to purchase the dropped Russian volumes on the market at a higher price. But the sale of own gas from Norway and LNG at higher prices will also make it possible to compensate for losses, the Austrian company explained.

On the eve of stopping the transit of Russian gas through Ukraine, Slovak Prime Minister Robert Fico wrote to the European Commission that the consequences would be significant. The head of the Slovak government estimated the additional costs of the EU countries over two years at 200 billion euros due to rising gas and electricity prices.