EON SE said that Europe’s energy market is still at risk of spiking prices this winter and urged homes and businesses to continue to conserve gas and power.
(Bloomberg) — EON SE said that Europe’s energy market is still at risk of spiking prices this winter and urged homes and businesses to continue to conserve gas and power.
European wholesale gas prices have plunged from record levels last year and storage sites are almost full ahead of the winter. Still, the German utility warned that if events like unplanned supply shortages coincide with cold weather during the winter, that could lead to significant price increases.
“The likelihood of a repetition of the crisis of last winter has gone down significantly, which can also be seen in the forward market,” Leonhard Birnbaum, chief executive officer at EON, said in an interview with Bloomberg Television. “But we have to be clear that the structural change due to the Russian war in Ukraine and the drop out of Russian gas in the supply of Europe is going to stay and therefore the crisis is not over.”
Whether nations should still be subsidizing consumers and businesses with their energy bills is something that each government will have to decide as the markets are very different, Birnbaum said.
“There are certain markets where this is still necessary, and there are markets where this is not the case, for example in Germany,” he said.
Over the longer term, he expects gas prices to go up as the fuel shipped on tankers are generally more expensive than piped gas from Russia.
READ MORE: EON Raises Earnings Goals as Energy Market Stabilizes
EON also said it has ramped up investments in the energy transition to position itself for further growth as Europe’s power markets go increasingly green, something that will also aid energy independence for the region. It spent about €2.4 billion on infrastructure in the first half of 2023 — up 36% from a year earlier — and reaffirmed its full-year investment plan of about €5.8 billion.
–With assistance from Tom Mackenzie and Mark Cudmore.
(Updates with CEO comments from third paragraph.)
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