EU’s energy import bill has dropped by 35% since 2013

The European Commission has issued a new report on energy prices and costs across Europe. The report finds that, in general, wholesale prices of energy have fallen in recent years, although retail prices have not dropped.

The fall in wholesale prices – driven by weaker global demand for energy and an increase in supply of US shale gas and Liquefied Natural Gas (LNG) – has reduced the EU’s energy import bill by 35% since 2013.

The report notes that wholesale electricity prices are at their lowest for 12 years, gas prices have fallen by 50% since 2013 and oil prices by 60% since 2014. The EU’s internal energy market appears to be working, although improvements can be made.

Meanwhile, retail prices have not fallen in general, due to a rise in network charges, taxes and levies which has offset the fall in wholesale energy prices, the report highlights. Electricity retail prices have risen by about 3% per year since 2008, and gas prices by 2%. As a result, household expenditure on energy is 5.8%, up from 5.3% in 2008.

However, it also notes that energy costs for households are not high on average, but vulnerable households still need protection.

For businesses overall, energy costs are lower, accounting for less than 2% of production costs on average. However, for energy-intensive industries, costs can be far higher and can even determine the competitiveness of some industries.  As such, support to protect against unequal international competition is often provided.

Wholesale energy prices have converged, across Europe and around the world – the gap with lower US prices has reduced, but so has the gap with higher Asian prices.

Global fossil fuel prices will continue to be volatile, and to offset this uncertainty greater investment is needed in energy efficiency and in diversifying energy supplies away from fossil fuels.

The Commission’s plan for an Energy Union is working to achieve this by proposing legislation on smarter appliances and buildings, promoting low carbon and renewable energies and smoothing out the functioning of the internal market.

Report on energy prices and costs

Source: European Commission – Energy News
EU’s energy import bill has dropped by 35% since 2013