UK Electricity Supply Prices Surge Nearly 60% This Year
Increased Gas Power Share Amid Green Policies...Continued Rise Expected
[Asia Economy Reporter Hyunwoo Lee] Electricity prices are soaring worldwide, especially in Europe, due to the global surge in natural gas prices. As countries limit the use of coal and nuclear power under their green policies and increase the share of natural gas power generation, electricity prices have risen sharply. With record-breaking heatwaves this summer caused by global warming, electricity demand has also surged, raising concerns that the rapid rise in electricity prices will continue for some time.
According to the Wall Street Journal (WSJ) on the 13th (local time), electricity prices in European countries have recently surged. According to data from Argus Media, a UK energy information company, the electricity supply price in the UK reached 102.98 euros (about 140,000 won) per 1 MWh, a 59.8% increase compared to the end of last year. WSJ reported, "Electricity prices in major European countries such as the UK, Germany, Spain, and Italy are at their highest levels since the 2000s."
In the United States, where residential electricity prices had not fluctuated much until now, electricity prices are rapidly rising due to the surge in natural gas prices. According to data from the U.S. Energy Information Administration (EIA), the retail electricity price for the residential sector in the U.S. is 13.57 cents (about 155 won) per 1 kWh, up 0.37 cents compared to the previous year. Considering that it increased by 0.19 cents year-on-year last year, the rise has nearly doubled.
The main cause of the electricity price surge is analyzed to be the rise in natural gas prices. On this day, natural gas traded on the New York Mercantile Exchange (NYMEX) was priced at $3.69 per 1 MMBtu, more than doubling in one year. Natural gas prices, which fluctuated between $1.6 and $1.8 last July, have sharply increased as the share of natural gas power generation has risen due to countries' green policies. According to global energy company BP's data from last year on the share of power generation sources worldwide, natural gas accounts for 23.3% of total power generation, second only to coal (36.4%). This is significantly higher compared to hydro (15.6%), nuclear (10.4%), and renewable energy (10.4%).
With electricity demand greatly increasing due to this summer's heatwave, natural gas and electricity prices are expected to rise together for some time. Chris Midgley, senior analyst at S&P Global Platts, said in an interview with WSJ, "Currently, natural gas supply cannot fully meet European demand, and demand in Asia and Latin America is also increasing significantly, so the upward trend is expected to continue for at least one year."
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