Putin’s war has reached new levels of reckless evil in recent days.

Attacks against nuclear power plants in Ukraine have demonstrated just how far Russia is willing to go in this invasion. Although seen as strategic targets, the risk of a botched attack at these power plants would be catastrophic.

In this article we’ll explore the retaliatory actions from the EU, and what domestic customers in the UK can do to help out.

Nuclear Power Plants Attacked – Energy Sanctions to Come?

The European Union has been hotly debating a new raft of sanctions against Russia. This new batch could hit the Russian Economy where it hurts the most, in the energy sector.

European officials have communicated to CNBC that ministers will be looking at imposing energy sanctions against Russia when they meet this Friday. EU foreign affairs ministers are convening in Brussels to explore the next steps to follow against Russian aggression. As the invasion of Ukraine has intensified in recent days, the largest nuclear power plant in Europe (Zaporizhzhia, Ukraine) has been seized by Russian forces.

The EU’s Foreign Policy Chief, Josep Borrell, has recently stated that “everything is on the table”. Although no major decisions are expected in the coming days, both defensive and offensive sanctions against Russia could be looked at.

Representatives from the United Kingdom, Ukraine, Canada, and the United States will also be present for these discussions. It is believed that Friday offers a good moment to take stock of where the West is at with sanctions, and offers a good opportunity to show the transatlantic unity and strong cooperation between the EU and NATO.

EU sanctions already include the well discussed strategy of blocking Russian banks from the international payment system, SWIFT. Some believe this a severe sanction in itself, but there are growing calls to do more.

Crucially, Russia is an important source of energy for the European Union. In 2021, the EU imported around 45% of gas from Russia (according to the International Energy Agency). The year prior to this, 2020, Russian oil imports accounted for about a quarter of the bloc’s oil purchases.

The Prime Minister for Poland, Mateusz Morawiecki, said that Sberbank and Gazprombank had not yet felt the force of EU sanctions as they facilitate transactions relating to the supply of energy to the EU. These are two major Russian banks of vast scale.

The United States have also vocalised that they believe energy sanctions are on the table but the potential costs of implementing them would have to be analysed. Implementing energy embargoes would almost certainly lead to higher costs for consumers in the U.S and the EU.

It is believed that energy sanctions against Russia would be painful. The longer the decision is delayed, the easier it becomes to move – as the transition from Winter to Spring lessons the seasonal spike in energy demands. The EU has so far said that any ripple effects from sanctioning Russia are worth it, given that Putin is not just attacking Ukraine – rather European democratic values as a whole.

Domestic Action – How You Can Help

UK consumers are able to reduce their reliance, and thus the EU’s reliance on Russian energy by temporarily reducing thermostats. New analysis from the International Energy Agency reveals that turning thermostats down one degree could be an effective strategy.

The IEA has also released a 10-point plan that could bring down total gas imports from Russia by other a third. Additional temporary options could further deepen the cuts to well over half – with the added bonus of lowering carbon emissions.

As Europe is so heavily reliant on Russian natural gas, this is a tricky situation to navigate. Germany and Austria depend on Russia for more than half of their gas, with both countries vowing to end this dependence in the coming times.

The suggestions from the International Energy Agency are as follows;

Do not sign any new gas supply contracts with Russia. [Impact: Enables greater diversification of supply this year and beyond]
Replace Russian supplies with gas from alternative sources [Impact: Increases non-Russian gas supply by around 30 billion cubic metres within a year]
Introduce minimum gas storage obligations [Impact: Enhances resilience of the gas system by next winter]
Accelerate the deployment of new wind and solar projects [Impact: Reduces gas use by 6 billion cubic metres within a year]
Maximise power generation from bioenergy and nuclear [Impact: Reduces gas use by 13 billion cubic metres within a year]
Enact short-term tax measures on windfall profits to shelter vulnerable electricity consumers from high prices [Impact: Cuts energy bills even when gas prices remain high]
Speed up the replacement of gas boilers with heat pumps [Impact: Reduces gas use by an additional 2 billion cubic metres within a year]
Accelerate energy efficiency improvements in buildings and industry [Impact: Reduces gas use by close to 2 billion cubic metres within a year]
Encourage a temporary thermostat reduction of 1°C by consumers [Impact: Reduces gas use by some 10 billion cubic metres within a year]
Step up efforts to diversify and decarbonise sources of power system flexibility [Impact: Loosens the strong links between gas supply and Europe’s electricity security]

The Executive Director of the IEA, Fatih Birol, had this to say –

“Nobody is under any illusions anymore. Russia’s use of its natural gas resources as an economic and political weapon show Europe needs to act quickly to be ready to face considerable uncertainty over Russian gas supplies next winter… The IEA’s 10-point plan provides practical steps to cut Europe’s reliance on Russian gas imports by over a third within a year while supporting the shift to clean energy in a secure and affordable way… Europe needs to rapidly reduce the dominant role of Russia in its energy markets and ramp up the alternatives as quickly as possible.”

Last year, the EU imported an average of over 380 million cubic metres per day of gas via pipeline from Russia. This equates to around 140 billion cubic metres for the year as a whole.

Additionally, 15 billion cubic metres of natural gas was delivered in the form of liquefied natural gas, often shortened and referred to as LNG. The final total of 155 billion cubic metres imported from Russia accounts for almost 45% of the EU’s total gas imports in 2021 and 40% of total gas consumption.

Although the UK uses relatively little Russian gas as much of UK supply comes from the North Sea and Norway, it does still account or about 6% of total imports and 4% of UK gas demand. This has risen from almost none in 2017 according to analysis of government data provided by the Energy and Climate Intelligence Unit.

Customer Billing – Will I Be Affected? 

As already mentioned, the ripple effects of implementing sanctions against Russia have been deemed as a worthwhile cost. As such, EU citizens will need to weather these in their everyday lives.

For UK energy customers, it is difficult to say how your bills will be affected due to the serious volatility in the energy markets. It is important to remember that energy prices as a whole are rising, and this will be passed onto consumers through energy bills, making it something to keep a close eye on.  

Different suppliers will feel the pinch in different ways so it is crucial to be aware of the current situation your energy supplier finds themselves in. Energy Solutions keeps up to date supplier profiles for all of the energy suppliers in the UK, which you can find here. 

At a time where bills look set to rise due to market volatility, it is also a good idea to ensure that you are not being overcharged for any of your utilities. It can be a tricky task to navigate but Energy Solutions has curated online tools to remove the hassle.  

You can find our free online Gas Bill Calculator here. 

You can find our free online Electricity Bill Calculator here. 

Energy Solutions by Us, for You  

At a time of great uncertainty in global energy markets, it is easy to feel lost in it all.  

Keeping up to date with developing situations and the associated ramifications is a tricky and time-consuming job. It is also one that is not likely a priority for you and your business.

So, what do you do? 

You partner with energy procurement experts to take the load off of your desk. 

Energy Solutions have been trusted brokers for countless businesses for over twenty years, which means we know how to navigate the energy markets during a time of uncertainty. 

Website: https://www.energybrokers.co.uk/ 

Email: nick@energybrokers.co.uk 

Call Us: 0131 610 1688 

WhatsApp: 07757 400 788