EU power demand reduction below 10pc target

EU power demand in December-January declined by around 5.4pc compared with the five-year average for the period, but was below the 10pc voluntary reduction target set for the December-March period, data compiled by Argus show.

Electricity consumption across 25 of the 27 EU members — with just Cyprus and Malta excluded — reached an hourly average of 304.8GW over December-January, down from 322.1GW for the equivalent period in 2017-22, according to data from local transmission system operators (TSOs) and grid association Entso-E.

Demand fell in most countries, with the highest decreases seen in Greece, Romania and Slovakia at more than 10pc, while two members — Ireland and Luxembourg — bucked the trend and reported increases (see table).

Local TSOs, either directly or through Entso-E, typically release demand on a net basis, while the EU's emergency regulation on 30 September to address high energy prices calls for a voluntary overall reduction target of 10pc of gross electricity consumption, which includes electricity used by power generating facilities. And despite applying to the four-month period between December 2022 and March 2023, the reduction is in comparison with a five-year average for November-March, according to the regulation.

That same regulation set a mandatory reduction target of 5pc of gross electricity consumption during peak hours, although under a different comparison basis and with more leeway for member states. EU countries in that case must identify 10pc of their peak hours from 1 December 2022-31 March 2023 and calculate the reduction as the difference between actual demand in the selected peak hours and consumption forecast by local TSOs, without considering the effect of the measures put in place to reach the target.

Portugal, for instance, will consider 18:00-21:30 in working days as peak hours. The country recorded a reduction of only 0.4pc in net power consumption for December-January but a much steeper 4.4pc decrease in the selected peak hours.

Apart from variations in temperatures and industrial activity across Europe, measures set at a national level to reduce power consumption and mitigate the impact of high wholesale prices on consumers — see European energy crisis measures data and download — explain some of the differences between member states.

France

Power demand in France — the biggest consumer in the EU over December-January — averaged 64.3GW, around 3pc lower than the average for the equivalent period in 2017-22. Temperatures in the country mostly stood above seasonal norms until mid-January, limiting power consumption for heating. And the power-intensive industries have cut demand by 18pc on the year as of the end of January owing to high prices on the market, data from French TSO RTE show. This decline also comes as the government has announced a national energy savings plan, aiming to cut overall energy demand by 10pc over the next two years.

Germany

Germany, the second-largest consumer, recorded a steeper decline in demand than France, by around 6.1pc to an average of 56.6GW. The German spot index for December and January declined by around €9/MWh on the year to €185/MWh as the period between late December and mid-January recorded high wind generation and mild temperatures. In January, Germany also extended its short-term energy-saving measures in public and private buildings to mid-April from the previous date of the end of February, including reducing the minimum temperature in workplaces by 1°C below the previously recommended level, and setting the maximum temperature in public workspaces at 19°C, as well as prohibiting lighting for advertising systems between 10pm and 6am the following day.

CWE

Elsewhere in central western Europe (CWE), demand in the Netherlands averaged around 12.5GW over December-January, 1.3GW below the five-year average for the period and down by 6.4pc year on year, according to data from Entso-E. Overnight temperatures in Amsterdam during the past two months have stood in line with seasonal norms, although minimums in December were almost 2°C below historical levels, averaging 1.2°C. And while the winter has turned milder during January, with daily minimum temperatures climbing to 3.5°C across the month, overnight temperatures during the second half of the month dropped back to just 0.5°C, falling below norms by 0.6°C.

In Belgium, power demand stood at 9.85GW over December-January, more than 4pc lower than the five-year average for the period. The decline is partly owing to high prices on the power market, which are pushing consumers to cut their consumption, Belgian TSO Elia said. In addition, Belgium has seen its onshore wind output reach a record high of 1.1GW in January, which coupled with lower domestic demand lifted power exports.

Austrian demand averaged around 7.4GW across December and January, down by around 6.5pc compared with the five-year average. The spot index over the past two months averaged €203/MWh, a decline of more than €15/MWh on the year. This was driven by lower prices in January, as minimum temperatures rose and stronger hydro and onshore wind output pushed down gas-fired generation across the first half of the month. The country launched an energy-saving campaign in September, aiming to conserve 11pc of consumption. And in December, Austria approved legislation introducing weekly tenders for demand-side power tenders that will apply when voluntary measures are not sufficient to bring consumption down. The legislation expires at the end of this year.

Ireland

Demand in the Ireland has been well above the five-year average, with strong growth coming largely from increasing power demand from data centres in recent years. Irish regulator CRU has brought in changes to network tariffs to incentivise demand flexibility and the moving of consumption away from peak hours — by increasing tariffs for peak hours and decreasing them for non-peak times. Data centres accounted for 14pc of metered electricity consumption in the country in 2021, double the share from 2017, data from the Central Statistics Office show — with demand up to around 455MW from 200MW in 2017. With more data centres continuing to connect, this could reach 28pc of demand by 2031, TSO Eirgrid has said.

Iberia

Spanish power demand was almost 9pc lower in December-January compared with the previous five years. Consumption in 2022 was the lowest in 19 years, ending even below the pandemic-hit levels of 2020, as demand was particularly weak in the last four months of 2022. The government announced a wide energy-savings plan in the summer including new cooling and heating temperature thresholds for the public and service sectors. The measures, combined with lower industrial gas and power demand as a result of higher prices, weighed on overall consumption.

In Portugal, overall demand was just 0.4pc lower in December-January, despite the country implementing an energy savings plan late in the summer.

Italy

Italian power demand averaged 31.2GW over December-January, down from 33.2GW across the same period a year earlier and 7pc lower than the five-year average. Most of the reduction was driven by lower industrial consumption. Industrial consumption in December 2022 was 15pc lower compared with December 2021, according to Italian grid operator Terna's IMCEi index ― which collects data from around 1,000 large industrial power-intensive companies across various sectors. Demand was down in almost all sectors, particularly ferrous and non-ferrous metals.

The Italian spot index averaged €294.91/MWh in December 2022, falling to €174.79/MWh across January owing to above-average temperatures and Terna's consumption reduction scheme, whereby the operator carried out tenders for power-intensive companies that were willing to restrict their demand until the end of January. Terna may ask these companies to remain available for 300 extra hours of consumption reduction until the end of March.

Nordic region, Baltic states

Sweden reduced its power consumption by 4.6pc over December-January compared with the five-year average, to around 9.7GW. The Swedish government has prioritised security of supply and cost support measures during the past few months, but it has urged consumers to voluntarily reduce demand at certain times.

In Finland, demand dropped by 7pc to 10.2GW. The Finnish government has actively encouraged consumers to lower their electricity usage through its DegreesLower campaign — with around 70pc of all Finnish consumers reducing their consumption.

Denmark recorded a much more limited reduction, of just around 0.9pc. Power demand averaged 4.24GW over December-January, down from a five-year average of 4.28GW. But the country is targeting an overall drop in consumption of 10pc, in line with the EU.

In the Baltic states, demand in Estonia fell by just over 0.8pc to 1.1GW. Estonia has a voluntary demand reduction measure in place until April.

Latvian and Lithuanian power demand averaged 821MW and 1.49GW, respectively, down by 9pc and 2pc compared with the five-year average. Industrial consumption fell in Lithuania as firms planned to adjust their working hours to avoid peaks in gas and electricity consumption over the 2022-23 winter. And Latvia applied short-term measures that include installing more LED lighting and sustaining heating temperatures at around 19-20°C.

CEE

In central and eastern Europe (CEE), Slovakia recorded the third-largest drop across the entire EU in December-January consumption compared with the five-year average, of 13.5pc. This was much steeper than decreases of 4pc in the Czech Republic and just 0.5pc in Poland. Temperatures over December-January were higher than seasonal norms in all three countries, which reduced demand for heating. Temperatures in Prague averaged 1.7°C, compared with the historical average of 1°C, while temperatures in Bratislava averaged 2.9°C, up from a 1.9°C seasonal norm. And in Warsaw, average temperatures were 1.4°C above historical averages.

Hungarian demand was slightly over 4GW, down by 3.6pc from the near 4.2GW average of the same period over the previous five years. The Hupx spot index averaged €204.92/MWh, down from €225.29/MWh over the same period last year because of strong hydropower output in the Balkans, high German wind generation and higher-than-usual temperatures, with the minimum temperature in Budapest averaging 1.1°C — almost double the average of the past five years. Demand has also dropped in recent months after the country from 1 August removed a long-running cap on household energy prices for power consumed above an annual threshold of 2,523kWh, while it announced a 150bn forint (€386mn) scheme to help increase the energy efficiency of large domestic companies.

In Slovenia, demand averaged 1.47GW, dropping by almost 7.5pc compared with the 1.59GW average of the past five years. The country has passed several legislative acts that aim to drive down demand in the peak-load period between January and March by 10pc. TSO Eles is holding weekly tenders in which it receives offers from market participants which are willing to reduce their consumption. The firm distributes payments in exchange for this reduction, which it allocates from revenues generated by a windfall tax.

And in Croatia, demand dropped by almost 3pc in December-January, from 2.2GW over the past five years to just over 2.1GW. The country's government has adopted several regulations that aim to reduce power consumption, including recommendations to not heat rooms above 21°C and to encourage the use of more energy-efficient LED lighting. The recommendations are effective until 31 March.

SEE

Southeast Europe (SEE) saw the two countries with the highest declines in power demand across the EU. Greece reduced December-January demand at the fastest pace compared with its EU neighbours, at 14pc below the 2017-22 average. Households with a monthly consumption of between 501kWh and 1MWh received €280/MWh of support in January, getting an additional €50/MWh if they reduced their consumption by 15pc from last year. The government also provided €190/MWh in support for households with a monthly consumption of more than 1MWh, also granting an additional €50/MWh if they meet the 15pc reduction target.

Romanian demand averaged nearly 6.5GW, some 1GW, or 13.5pc, below the same period for the past five years, data from TSO Transelectrica show. Minimum temperatures in Bucharest averaged nearly 0°C over December-January, 2.4°C above the five-year average, driving the overall drop in demand. But the decrease may also be linked to lower industrial activity in the country — Romanian industrial activity was 4pc lower on the year in November, Eurostat data show.