Europe is facing a new pandemic-like situation where societal collapse threatens many countries. Year of bad political decisions on energy policies in the EU has created a situation in which countries in the EU are not prepared for the coming winter’s high energy prices. The current strategy in some EU countries is to cap electricity prices or to compensate people for the increased cost through temporary tax cuts.
When everything becomes more expensive, it does not work to compensate people for the smallest increase in expenses.
Electricity market analysts have forecasted that the price for heating a standard villa in the southern half of Sweden during the five winter months can rise by SEK 10,000 a month. Similar price increases threaten many European countries where the cold temperatures are not as high, but electricity prices are even higher than in Sweden.
Even for many electricity-intensive companies, this means extremely high costs that can make it impossible to continue the business. Companies are already warning that staff reductions are expected and, worst case, a series of bankruptcies.
How many average households can pay an extra SEK 10,000 a month for an item that is impossible to live without? Of course, we can save energy by lowering indoor temperature and improving energy efficiency. It is possible to save a little on the margin. But the enormous cost cannot be helped. If there is an extra cold winter, the cost shines even more.
If people are out of work, paying their bills will be even more challenging, which could trigger a housing crash if panicked people are forced to sell their apartments and houses because they can’t afford the combination of rising interest rates and skyrocketing electricity prices.
If it becomes more expensive to drive an electric car, which is more costly to purchase than a gasoline-powered car, an essential part of the climate transition is threatened.
The government looks at energy, specifically electricity, from a centralized perspective. With interest from lobbyists, political parties on the right electricity have been sold out from a state-controlled service to companies that trade electricity spot prices on the electricity exchanges like EEX and Nord Pool.
There is a solution to this madness on how electricity is traded and distributed; change, resistance and protests from companies and individuals that will lose the most will undoubtedly happen.
The solution is to decentralize residential electricity, making it easier for people to place residential windmills and solar panels on their houses. In Sweden, there are accordingly to Statista 2.1 million one and two-dwelling houses. So if you place a 4kw wind and sun combo on each roof, you will have a combined power output of 8.4 gigawatts at max power. Because sun and wind are not always at their peak, a more realistic energy capacity is about 2 gigawatts. A nuclear plant, on the other hand, produces, in general, about 1 gigawatt of power.
Why SUN and Wind
The residential electricity market has been focused on Solar. The wind is also a vital resource, which is why a Solar/Wind combo is the best alternative, as SUN just shines a few hours a day. The wind can be available 24×7 – of course, we know that there are days without wind, often, when there is no wind, it is clear, and SUN shines during the day. Having storage capacity would be critical to making residential electricity a norm.
What is needed
There needs to be a separation of residential of commercial electricity, change policies and deregulate residential electricity, and make the electricity companies buy electricity from residential overcapacity. What is blocking today is all about money, the electricity company makes money on the cost of use of power lines, the connection to an electricity grid, and to sell electricty to residence, government, through policies, makes money on taxing electricty to residents and electricity companies.
If we are going to work for prosperity, the green transition and not indebting residents over the cost of electricity, we need to start thinking outside the bank vault. We need to have a more social approach to essential resources, a sharing model rather than a for-profit thinking.