European power use falls, but winter targets still a stretch

Electricity use in Europe is falling to levels seen during the worst of the COVID-19 pandemic, but some countries need to cut consumption further to prepare for a possible energy supply shortage this winter, according to a Reuters analysis of electricity data.

European countries are racing to save energy as they head into winter after a collapse in Russian gas exports in response to Western sanctions. Widespread outages in France's aging nuclear fleet have exacerbated Europe's tight power supplies. EU energy ministers agreed at the end of September to voluntarily reduce electricity consumption by 10% at the end of the winter months to avoid forced blackouts during peak demand hours, and committed to a mandatory 5% cut during peak hours each month. According to data from the European Network of Transmission System Operators for Electricity (ENTSOE), electricity consumption in the same period of the year was well below levels seen since 2015 and reached lows not seen since COVID lockdowns reduced demand in April and May 2020. Morgan Stanley (NYSE:MS) said high electricity prices, combined with weak nuclear generation as well as a dry summer that limited hydropower production, have weighed on electricity demand and are likely to do so for some time to come. "We think demand destruction will play a crucial role in balancing the energy supply-demand equation over the next two winters," the investment bank's utilities analysts said in a research note. Total consumption in Europe fell 4.3% in September compared with the 2015-2021 average for the same period of the year, according to Reuters calculations using data from ENTSOE. The International Monetary Fund said on Tuesday that the eurozone economy was heading for contraction by the end of the year and forecast growth of just 0.5% in 2023 as both Germany and Italy slip into recession. With countries spending widely varying amounts to help consumers cope with high electricity prices, the consumption data provides only limited evidence that more aggressive government aid is weakening the incentive to reduce usage, as feared by organizations such as the European Central Bank and the IMF. Follow Global Economic Developments on Social Media! Click here to follow Ieconomy official Facebook account! Click here to follow Ieconomy official Instagram account! Click here to follow Ieconomy official Twitter account!