Help to curb electricity and gas hikes
If in 2022 gas and electricity prices do not fully affect farms, 2023 will be more critical. Overview of state aid to enterprises.
This is a traffic light that will be carefully checked this winter. On the Ecowatt website or mobile app, a red light will be synonymous with the risk of an “imminent” power outage.electricity if there is no reduction in consumption in the relevant area. It will not be spared by farms that are not classified as priority load reduction measures. If the situation regarding the availability of energy is tense, so is its price.
It’s hard to keep up
Russia’s attack on Ukraine was not the only reason for the unprecedented growth in the gas and electricity market, with Russian gas accounting for more than 40% of Europe’s supply. Economic recovery after 2020, particularly in Asia, has already shown that natural gas producers are struggling to keep up.
Later, several meteorological phenomena were added to explain the ever-rising curves of the markets. “The lack of wind in Europe in 2021 led to a decrease in wind production. Water shortages in South America and then in Europe in 2022 reduced hydroelectric production,” he notes. Aurelien Jouaultdirector Opera Energy, a gas and electricity brokerage company for professionals. The expert cites “logistical and technical problems in the Gulf of Mexico, the Netherlands and Norway” as an example.
To keep up with electricity demand, suppliers have had to increase production from natural gas, which has led to increased demand for gas. “The demand today is such that they have to turn to all the generation assets available to meet it: renewable energy, nuclear, coal and gas, which are now more expensive than coal.”
Fears for 2023/2024
The increase in the price of electricity in France can be explained by another event. Our nuclear fleet, which normally covers a significant portion of our supplies, is far from operating at full capacity. Aurélien Jouault emphasizes: “Since this nuclear production has been drastically reduced, the market must manage a situation that it certainly does not know how to manage for the first time: the shortage”. But Opéra Energie’s greatest fear is not for this winter.
The risks of layoffs in France for the winter of 2023-2024 are “likely to be higher,” according to the brokerage firm. Blame it on the lack of liquefied gas terminals to accommodate LNG carriers after traveling at sea, and EDF’s difficulty in restoring full power to its nuclear fleet. A situation that should keep prices consistently high.
Many sectors of agriculture are associated with significant electricity or gas consumption: poultry and pig farming sectors, irrigators, methanation plants, processing plants, production under greenhouses, those requiring cooling of food products such as endives or even apples, etc. But not all farms are affected in the same way by rising energy prices. Some may benefit from the government-imposed tariff shield from 2022, while others are still “protected” by contracts signed with their suppliers.
Farmers with fewer than 10 employees, a turnover of less than 2 million euros and an electricity meter of 36 kVA or less (blue regulated tariffs) as well as all VSEs (very small enterprises) and individuals tariff shield on electricity bills. The increase in regulated tariffs will be limited in 2022 (+4% on February 1, 2022) and in 2023 (+15% on February 1, 2023).
A help desk has been opened for the payment of gas and electricity fees for March-December 2022 for companies that cannot benefit from the tariff shield. It’s been cold since September 2022. Four periods have been established for the submission of aid applications with different entry criteria.
It increases in 2023
“Until now, we have received very few requests to apply for gas and electricity assistance. Samuel the Greatbusiness consultant Cerfrance Cotes-d’Armor. First of all, because the criteria for obtaining assistance for March-August 2022 are very restrictive. Then, for example, because many farmers are covered by the tariff shield, like most dairy producers. Or their bills haven’t gone up yet because they have a fixed price or weakly indexed power purchase agreement, which is still going on.”
Samuel Le Grand expects energy, electricity and gas costs for operations to increase further in 2023 with the expiration of certain contracts (particularly bundled offers) and the commitment to renegotiate them at new rates.
Easy entry criteria
“The access criteria for gas and electricity assistance for September-December 2022 are less restrictive,” continues the consultant, who believes that more farmers can benefit from this.
From January 1, 2023, a new aid, an electric shock absorber, will be introduced. It is intended for VSEs (very small businesses) and SMEs (small and medium-sized businesses) that do not benefit from the tariff shield. According to the calculations of the Ministry of Economy, this device will allow paying 20-25% of the total electricity bill for a company. Electricity suppliers will apply this directly to the bill.
Mayor Bruno also announced the maintenance of the gas and electricity assistance window for companies that will still be eligible after benefiting from the electricity shock absorber on December 8, 2022.