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New Energy World™
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Driven by high energy bills, Europe’s efficiency measures also have a lasting effect
22/11/2023
6 min read
Feature
Record energy prices across Europe seen last winter have resulted in residential and industrial energy users investing heavily in measures to bring down their energy consumption. This trend produced an unprecedented dip in energy demand across the Continent last winter. Here, energy journalist Karolin Schaps investigates whether the drop in consumption was a one-off phenomenon or if energy efficiency changes are having structural impact.
Global investments in energy efficiency reached a record high last year, with around $285bn spent on making buildings more sustainable, according to the International Energy Agency (IEA). ‘[This] marks a strong increase in efficiency spending and electrification from the previous year and is the result of a continued effort, led by Europe, in response to the energy crisis triggered by the Russian invasion of Ukraine, along with policy and price-driven increases in spending in other countries,’ the Agency said in its annual World Energy Investment report.
Russia’s war on Ukraine erupted in February 2022 at a time when Europe’s gas markets were already under supply strains, exacerbating a nervous trading environment that quickly resulted in extremely high gas and power prices for European consumers. Benchmark European day-ahead gas prices spiked above €300/MWh in late August 2022, compared to levels seen before the COVID-19 pandemic of around €10–20/MWh.
Gas savings
In response to high energy prices and Russia’s influence on Europe’s gas market as its main supplier, the European Union (EU) enforced a 15% reduction in gas demand between 1 August 2022 and 31 March 2023, compared to each member state’s average consumption over the previous five years. Earlier this year, the measure was extended for another 12 months until 31 March 2024, but it remains voluntary. The one-year extension is expected to save roughly 60bn m3 of gas, more than the combined annual gas consumption of France and Belgium.