South Korea, Areva partner to secure uranium supply

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Nuclear power company Areva SA has signed an agreement with South Korean utility company Korea Electric Power Corporation (KEPCO) under which the two companies will develop and operate Niger's Imouraren uranium mine, which is the second-largest uranium mine in the world.

Imouraren SA, the company that will be operating the mine, is jointly owned by Areva and the state of Niger. Areva currently holds a 67% stake in the mine. As a result of the new agreement, KEPCO will now indirectly hold a stake of 10% in the company.

KEPCO's board of directors has approved an investment of more than $253 million in the project.

Under the terms of the agreement, KEPCO will take 10% of the mined uranium for utilization in South Korea's nuclear power plants. The agreement will hold for the duration of the mine's operations, which is expected to last for more than three decades. The Imouraren deposit is located in northern Niger and is counted as one of the world's most prominent uranium deposits. The mine will be operational from 2013 and is expected to have an initial capacity of 5,000 tons per year. KEPCO will secure about 700 tons per year of uranium.

The Areva-KEPCO partnership displays KEPCO's aim to secure a long-term supply of uranium for its power plants and demonstrates Areva's policy of strengthening long-term business relationships with major clients.

In June 2009, KEPCO acquired a 2.5% stake in the Georges Besse II enrichment plant being set up on the Tricastin nuclear site in southern France. KEPCO made the investment through its subsidiary Korea Hydro & Nuclear Power Company Limited (KHNP). Construction of the $4.3 billion Georges Besse II project began three years ago and is designed to include two enrichment units. The investment is one of the largest in France's industrial sector in the past 10 years. In 2016, the plant is expected to reach full capacity and produce 7.5 million separative work units per year. The facility at Tricastin is operated by Eurodif SA, a subsidiary of Areva.

KEPCO, through KHNP, currently operates 20 nuclear power reactors in South Korea. The plants require a total of about 3,100 tons per year of uranium. Nuclear power currently accounts for 40% of South Korea's domestic power supply. With the addition of the power derived from the six large reactors being constructed, nuclear power will account for 55% of the country's domestic power supply by 2022. Another four plants are presently in the planning stage.

South Korea's total power generation capacity at the end of 2008 was 72,500 megawatts (MW). This figure is expected to reach 88,000 MW by 2017 and 100,900 MW by 2022. Nuclear power contributed 17,716 MW in 2008 and by 2022, nuclear power generation capacity is expected to reach 32,900 MW. According to KHNP's plans, the company expects to spend $3.68 million on nuclear power plants before the end of this year. It plans to invest between $32 billion and $40 billion on 18 nuclear power plants by 2030.

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How ‘Virtual Power Plants’ Will Change The Future Of Electricity

Virtual Power Plants orchestrate distributed energy resources like rooftop solar, home batteries, and EVs to deliver grid services, demand response, peak shaving, and resilience, lowering costs while enhancing reliability across wholesale markets and local networks.

 

Key Points

Virtual Power Plants aggregate solar and batteries to provide grid services, cut peak costs, and boost reliability.

✅ Aggregates DERs via cloud to bid into wholesale markets

✅ Reduces peak demand, defers costly grid upgrades

✅ Enhances resilience vs outages, cyber risks, and wildfires

 

If “virtual” meetings can allow companies to gather without anyone being in the office, then remotely distributed solar panels and batteries can harness energy and act as “virtual power plants.” It is simply the orchestration of millions of dispersed assets within a smarter electricity infrastructure to manage the supply of electricity — power that can be redirected back to the grid and distributed to homes and businesses. 

The ultimate goal is to revamp the energy landscape, making it cleaner and more reliable. By using onsite generation such as rooftop solar and smart solar inverters in combination with battery storage, those services can reduce the network’s overall cost by deferring expensive infrastructure upgrades and by reducing the need to purchase cost-prohibitive peak power. 

“We expect virtual power plants, including aggregated home solar and batteries, to become more common and more impactful for energy consumers throughout the country in the coming years,” says Michael Sachdev, chief product officer for Sunrun Inc., a rooftop solar company, in an interview. “The growth of home solar and batteries will be most apparent in places where households have an immediate need for backup power, as they do in California, where grid reliability pressures have led utilities to turn off the electricity to reduce wildfire risk.”

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Home battery adoption, such as Tesla Powerwall systems, is becoming commonplace in Hawaii and in New England, he adds, because those distributed assets are improving the efficiency of the electrical network. It is a trend that is reshaping the country’s energy generation and delivery system by relying more on clean onsite generation and less on fossil fuels.

Sunrun has recently formed a business partnership with AutoGrid, which will manage Sunrun’s fleet of rechargeable batteries. It is a cloud-based system that allows Sunrun to work with utilities to dispatch its “storage fleet” to optimize the economic results. AutoGrid compiles the data and makes AI-driven forecasts that enable it to pinpoint potential trouble spots. 

But a distributed energy system, or a virtual power plant, would have 200,000 subsystems. Or, 200,000 5 kilowatt batteries would be the equivalent of one power plant that has a capacity of 1,000 megawatts. 

“A virtual power plant acts as a generator,” says Amit Narayan, chief executive officer of AutoGrid, in an interview. “It is one of the top five innovations of the decade. If you look at Sunrun, 60% of every solar system it sells in the Bay Area is getting attached to a battery. The value proposition comes when you can aggregate these batteries and market them as a generation unit. The pool of individual assets may improve over time. But when you add these up, it is better than a large-scale plant. It is like going from mainframe computers to laptops.”

The AutoGrid executive goes on to say that centralized systems are less reliable than distributed resources. While one battery could falter, 200,000 of them that operate from remote locations will prove to be more durable — able to withstand cyber attacks and wildfires. Sunrun’s Sachdev adds that the ability to store energy in batteries, as seen in California’s expanding grid-scale battery use supporting reliability, and to move it to the grid on demand creates value not just for homes and businesses but also for the network as a whole.

The good news is that the trend worldwide is to make it easier for smaller distributed assets, including energy storage for microgrids that support local resilience, to get the same regulatory treatment as power plants. System operators have been obligated to call up those power supplies that are the most cost-effective and that can be easily dispatched. But now regulators are giving virtual power plants comprised of solar and batteries the same treatment. 

In the United States, for example, the Federal Energy Regulatory Commission issued an order in 2018 that allows storage resources to participate in wholesale markets — where electricity is bought directly from generators before selling that power to homes and businesses. Under the ruling, virtual power plants are paid the same as traditional power suppliers. A federal appeals court this month upheld the commission’s order, saying that it had the right to ensure “technological advances in energy storage are fully realized in the marketplace.” 

“In the past, we have used back-up generators,” notes AutoGrid’s Narayan. “As we move toward more automation, we are opening up the market to small assets such as battery storage and electric vehicles. As we deploy more of these assets, there will be increasing opportunities for virtual power plants.” 

Virtual power plants have the potential to change the energy horizon by harnessing locally-produced solar power and redistributing that to where it is most needed — all facilitated by cloud-based software that has a full panoramic view. At the same time, those smaller distributed assets can add more reliability and give consumers greater peace-of-mind — a dynamic that does, indeed, beef-up America’s generation and delivery network.

 

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Heathrow Airport Power Outage: Vulnerabilities Flagged Days Before Disruption

Heathrow Airport Power Outage 2025 disrupted operations with mass flight cancellations and diversions after a grid failure, exposing infrastructure resilience gaps, crisis management flaws, and raising passenger compensation and safety oversight concerns.

 

Key Points

A grid failure closed Heathrow, causing mass cancellations and diversions, exposing resilience and communication lapses.

✅ Grid fire triggered airport-wide shutdown

✅ 1,400+ flights canceled or diverted

✅ Inquiry probes resilience, communication, compensation

 

On March 21, 2025, Heathrow Airport, Europe's busiest, suffered a catastrophic power outage, similar to another high-profile outage seen at major events, that led to the cancellation and diversion of over 1,400 flights, affecting nearly 300,000 passengers and costing airlines an estimated £100 million. The power failure, triggered by a fire at an electricity substation in west London, left Heathrow with a significant operational crisis. This disruption is even more significant considering that Heathrow is one of the most expensive airports globally, which raises concerns about its infrastructure resilience and broader electricity system resilience across Europe.

In a parliamentary committee meeting, Heathrow officials admitted that vulnerabilities in the airport’s power supply were flagged just days before the outage. Nigel Wicking, Chief Executive of the Heathrow Airline Operators' Committee (HAOC), informed MPs that concerns regarding power resilience had been raised on March 15, following disruptions caused by cable thefts impacting runway lights. Despite these warnings, the airport’s management did not address the vulnerabilities urgently, even as UK net zero policies continue to reshape infrastructure planning, which ultimately led to the disastrous outage.

The airport was closed for a day, with serious consequences for not only airlines but also the surrounding community and businesses. British Airways alone faced millions of pounds in losses, and passengers experienced significant emotional distress, missing vital life events like weddings and funerals due to flight cancellations. The committee is now questioning officials from National Grid and Scottish and Southern Electricity Networks to better understand why Heathrow’s infrastructure failed, in the context of a cleaner grid following the British carbon tax that reduced coal use, how it communicated with affected parties, and what measures will be taken to compensate impacted passengers.

Heathrow’s Chief Executive, Thomas Woldbye, defended the closure decision, stating it would have been disastrous to keep the airport open under such circumstances. He noted that continuing operations would have left tens of thousands of passengers stranded and would have posed safety risks due to the failure of fire surveillance and CCTV systems. However, Wicking, representing the airlines, pointed out that Heathrow’s lack of resilience was unacceptable given the amount spent on the airport, emphasizing the need for better infrastructure, including addressing SF6 in switchgear during upgrades, and more transparent management practices.

Looking forward, the MPs intend to investigate the airport’s emergency preparedness, why the resilience review from 2018 wasn’t shared with airlines, and whether enough preventative measures were in place amid surging data demand that could strain electricity supplies. The outcome of this inquiry could have lasting effects on how Heathrow and other major airports handle their infrastructure and crisis management systems, as drought-driven hydro challenges demonstrate the wider climate stresses on power networks.

 

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Doug Ford's New Stance on Wind Power in Ontario

Ontario Wind Power Policy Shift signals renewed investment in renewable energy, wind farms, and grid resilience, aligning with climate goals, lower electricity costs, job creation, and turbine technology for cleaner, diversified power.

 

Key Points

A provincial pivot to expand wind energy, meet climate goals, lower costs, and boost jobs across Ontario’s power system.

✅ Diversifies Ontario's grid with scalable renewable capacity.

✅ Targets emissions cuts while stabilizing electricity prices.

✅ Spurs rural investment, supply chains, and skilled jobs.

 

Ontario’s energy landscape is undergoing a significant transformation as Premier Doug Ford makes a notable shift in his approach to wind power. This change represents a strategic pivot in the province’s energy policy, potentially altering the future of Ontario’s power generation, environmental goals, and economic prospects.

The Backdrop: Ford’s Initial Stance on Wind Power

When Doug Ford first assumed the role of Premier in 2018, his administration was marked by a strong stance against renewable energy projects, including wind power, with Ford later saying he was proud of tearing up contracts as part of this shift. Ford’s government inherited a legacy of ambitious renewable energy commitments from the previous Liberal administration under Kathleen Wynne, which had invested heavily in wind and solar energy. The Ford government, however, was critical of these initiatives, arguing that they resulted in high energy costs and a surplus of power that was not always needed.

In 2019, Ford’s government began rolling back several renewable energy projects, including wind farms, and was soon tested by the Cornwall wind farm ruling that scrutinized a cancellation. This move was driven by a promise to reduce electricity bills and cut what was perceived as wasteful spending on green energy. The cancellation of several wind projects led to frustration among environmental advocates and the renewable energy sector, who viewed the decision as a setback for Ontario’s climate goals.

The Shift: Embracing Wind Power

Fast forward to 2024, and Premier Ford’s administration is taking a markedly different approach. The recent policy shift, which moves to reintroduce renewable projects, indicates a newfound openness to wind power, reflecting a broader acknowledgment of the changing dynamics in energy needs and environmental priorities.

Several factors appear to have influenced this shift:

  1. Rising Energy Demands and Climate Goals: Ontario’s growing energy demands, coupled with the pressing need to address climate change, have necessitated a reevaluation of the province’s energy strategy. As Canada commits to reducing greenhouse gas emissions and transitioning to cleaner energy sources, wind power is increasingly seen as a crucial component of this strategy. Ford’s change in direction aligns with these national and global goals.

  2. Economic Considerations: The economic landscape has also evolved since Ford’s initial opposition to wind power. The cost of wind energy has decreased significantly over the past few years, making it a more competitive and viable option compared to traditional energy sources, as competitive wind power gains momentum in markets worldwide. Additionally, the wind energy sector promises substantial job creation and economic benefits, which are appealing in the context of post-pandemic recovery and economic growth.

  3. Public Opinion and Pressure: Public opinion and advocacy groups have played a role in shaping policy. There has been a growing demand from Ontarians for more sustainable and environmentally friendly energy solutions. The Ford administration has been responsive to these concerns, recognizing the importance of addressing public and environmental pressures.

  4. Technological Advancements: Advances in wind turbine technology have improved efficiency and reduced the impact on wildlife and local communities. Modern wind farms are less intrusive and more effective, addressing some of the concerns that were previously associated with wind power.

Implications of the Policy Shift

The implications of Ford’s shift towards wind power are far-reaching. Here are some key areas affected by this change:

  1. Energy Portfolio Diversification: By reembracing wind power, Ontario will diversify its energy portfolio, reducing its reliance on fossil fuels and increasing the proportion of renewable energy in the mix. This shift will contribute to a more resilient and sustainable energy system.

  2. Environmental Impact: Increased investment in wind power will contribute to Ontario’s efforts to combat climate change. Wind energy is a clean, renewable source that produces no greenhouse gas emissions during operation. This aligns with broader environmental goals and helps mitigate the impact of climate change.

  3. Economic Growth and Job Creation: The wind power sector has the potential to drive significant economic growth and create jobs. Investments in wind farms and associated infrastructure can stimulate local economies, particularly in rural areas where many wind farms are located.

  4. Energy Prices: While the initial shift away from wind power was partly motivated by concerns about high energy costs, including exposure to costly cancellation fees in some cases, the decreasing cost of wind energy could help stabilize or even lower electricity prices in the long term. As wind power becomes a larger component of Ontario’s energy supply, it could contribute to a more stable and affordable energy market.

Moving Forward: Challenges and Opportunities

Despite the positive aspects of this policy shift, there are challenges to consider, and other provinces have faced setbacks such as the Alberta wind farm scrapped by TransAlta that illustrate potential hurdles. Integrating wind power into the existing grid requires careful planning and investment in grid infrastructure. Additionally, addressing local concerns about wind farms, such as their impact on landscapes and wildlife, will be crucial to gaining broader acceptance.

Overall, Doug Ford’s shift towards wind power represents a significant and strategic change in Ontario’s energy policy. It reflects a broader understanding of the evolving energy landscape and the need for a sustainable and economically viable energy future. As the province navigates this new direction, the success of this policy will depend on effective implementation, ongoing stakeholder engagement, and a commitment to balancing environmental, economic, and social considerations, even as the electricity future debate continues among party leaders.

 

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EU outlines $300 billion plan to dump Russian energy

REPowerEU Plan accelerates the EU's shift from Russian fossil fuels with renewable energy, energy efficiency, solar, wind, heat pumps, faster permits, and energy security measures by 2027, backed by grants, loans, and grid investments.

 

Key Points

EU plan to quit Russian fossil fuels via renewables and efficiency, with faster permits, by 2027.

✅ €300bn in grants and loans for efficiency and renewables

✅ Streamlined permits; solar mandate on new buildings

✅ Targets 2027 independence; cuts Russian gas, oil, coal

 

The European Union’s executive arm moved Wednesday to jump-start plans for the 27-nation bloc to abandon Russian energy amid the Kremlin’s war in Ukraine, proposing a nearly 300 billion-euro ($315 billion) package that includes more efficient use of fuels and faster rollout of renewable power, even as rolling back electricity prices remains challenging.

The European Commission’s investment initiative is meant to help the 27 EU countries start weaning themselves off Russian fossil fuels this year, a move many see as a wake-up call to ditch fossil fuels across Europe. The goal is to deprive Russia, the EU’s main supplier of oil, natural gas and coal, of tens of billions in revenue and strengthen EU climate policies.

“We are taking our ambition to yet another level to make sure that we become independent from Russian fossil fuels as quickly as possible,” European Commission President Ursula von der Leyen said in Brussels when announcing the package, dubbed REPowerEU.

With no end in sight to Russia’s war in Ukraine and European energy security shaken, amid what some describe as an energy nightmare for the region, the EU is rushing to align its geopolitical and climate interests for the coming decades. It comes amid troubling signs that have raised concerns about energy supplies that the EU relies on and have no quick replacements for, including Russia cutting off member nations Poland and Bulgaria after they refused a demand to pay for natural gas in rubles.

The bloc’s dash to ditch Russian energy stems from a combination of voluntary and mandatory actions. Both reflect the political discomfort of helping fund Russia’s military campaign in a country that neighbors the EU and wants to join the bloc.

An EU ban on coal from Russia is due to start in August, and the bloc has pledged to try to reduce demand for Russian gas by two-thirds by year's end, while debating gas price cap strategies to curb volatility. Meanwhile, a proposed EU oil embargo has hit a roadblock from Hungary and other landlocked countries that worry about the cost of switching to alternative sources.

In a bid to swing Hungary behind the oil phaseout, the REPowerEU package expects oil investment funding of around 2 billion euros for member nations highly dependent on Russian oil.

Energy savings and renewables form the cornerstones of the package, which would be funded mainly by an economic stimulus program put in place to help member countries overcome the slump triggered by the coronavirus pandemic.

The European Commission said the price tag for abandoning Russian fossil fuels completely by a 2027 target date is 210 billion euros. Its package includes 56 billion euros for energy efficiency and 86 billion euros for renewables.

Von der Leyen cited a total funding pot of 72 billion euros in grants and 225 billion euros for loans.

The European Commission also proposed ways to streamline the approval processes in EU countries for renewable projects, which can take up to a decade to get through red tape, as part of a broader effort to revamp the electricity market across Europe. The commission said approval times need to fall to as little as a year or less.

It put forward a specific plan on solar energy, seeking to double photovoltaic capacity by 2025 and pushing for a phased-in obligation to install solar panels on new buildings.

Simone Tagliapietra, an energy expert at the Bruegel think tank in Brussels, called REPowerEU a “jumbo package” whose success will ultimately depend on political will in the bloc’s national capitals, with examples such as Germany’s 200 billion euro energy price shield illustrating the scale of national responses.

“Most of the actions entailed in the plan require either national implementation or strong coordination among member states,” Tagliapietra said. “The extent to which countries really engage is going to be defining.”

The German energy think tank Agora Energiewende said the EU’s plan “gives too little attention to concrete initiatives that reduce fossil fuel demand in the short term and thereby misses the opportunity to simultaneously enhance Europe’s energy security and meet Europe’s climate objectives.”

The group's research shows rapidly expanding solar, wind parks and use of heat pumps for low-temperature heat in industry and buildings could be done faster than constructing new liquefied natural gas terminals or gas infrastructure, said Matthias Buck, its director for Europe.

The European Commission’s recommendations on short-term national actions to cut demand for Russian energy, which include potential emergency measures to limit electricity prices as well, coincide with deliberations underway in the bloc since last year on setting more ambitious EU energy-efficiency and renewable targets for 2030.

Those targets, being negotiated by the European Parliament and national governments, are part of the bloc’s commitments to a 55% cut in greenhouse gases by decade's end, compared with 1990 emissions, and to climate neutrality by 2050.

Von der Leyen urged the European Parliament and national governments to deepen the commission’s July proposal for an energy efficiency target of 9% and renewable energy goal of 40% by 2030. She said those objectives should be 13% and 45%, respectively.

Belgium, the Netherlands, Germany and Denmark plan to build North Sea wind farms to help cut carbon emissions.

 

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Cannes Film Festival Power Outage Under Investigation 

Cannes Film Festival Power Outage disrupts Alpes-Maritimes as an electrical substation fire and a fallen high-voltage line trigger blackouts; arson probe launched, grid resilience tested, traffic and trains snarled, Palais des Festivals on backup power.

 

Key Points

A May 24, 2025 blackout in Cannes disrupting events, under arson probe, exposing grid risks across Alpes-Maritimes.

✅ Substation fire and fallen high-voltage line triggered blackouts

✅ Palais des Festivals ran on independent backup power

✅ Authorities probe suspected arson; security measures reviewed

 

A significant power outage on May 24, 2025, disrupted the final day of the Cannes Film Festival in southeastern France. The blackout, which affected approximately 160,000 households in the Alpes-Maritimes region, including the city of Cannes, occurred just hours before the highly anticipated Palme d'Or ceremony. French authorities are investigating the possibility that the outage was caused by arson.

Details of the Outage

The power disruption began early on Saturday morning with a fire at an electrical substation near Cannes. This incident weakened the local power grid. Shortly thereafter, a high-voltage line fell at another location, further exacerbating the situation. The combined events led to widespread power outages, affecting not only the festival but also local businesses, traffic systems, and public transportation, echoing Heathrow Airport outage warnings raised days before a separate disruption. Traffic lights in parts of Cannes and the nearby city of Antibes stopped working, leading to traffic jams and confusion in city centers. Most shops along the Croisette remained closed, and local food kiosks were only accepting cash. Train service in Cannes was also disrupted. 

Impact on the Festival

Despite the challenges, festival organizers managed to keep the main venue, the Palais des Festivals, operational by switching to an independent power supply. They confirmed that all scheduled events and screenings, including the Closing Ceremony, would proceed as planned, a reminder of how grid operators sometimes avoid rolling blackouts to keep essential services running. The power was restored around 3 p.m. local time, just hours before the ceremony, allowing music to resume and the event to continue without further incident.

Investigations and Suspected Arson

French authorities, including the national gendarmerie, are investigating the possibility that the power outage was the result of arson, aligning with grid attack warnings issued by intelligence services. The prefect for the Alpes-Maritimes region, Laurent Hottiaux, condemned the "serious acts of damage to electrical infrastructures" and stated that all resources are mobilized to identify, track down, arrest, and bring to justice the perpetrators of these acts.

While investigations are ongoing, no official conclusions have been drawn regarding the cause of the outage. Authorities are working to determine whether the incidents were isolated or part of a coordinated effort, a question that also arises when utilities implement PG&E wildfire shutoffs to prevent cascading damage.

Broader Implications

The power outage at the Cannes Film Festival underscores the vulnerability of critical infrastructure to potential acts of sabotage. While the immediate impact on the festival was mitigated, the incident raises concerns about the resilience of energy systems, especially during major public events, and amid severe weather like a B.C. bomb cyclone that leaves tens of thousands without power. It also highlights the importance of having contingency plans in place to ensure the continuity of essential services in the face of unexpected disruptions.

As investigations continue, authorities are urging the public to remain vigilant and report any suspicious activities, while planners also prepare for storm-driven outages that compound emergency response. The outcome of this investigation may have implications for future security measures at large-scale events and the protection of critical infrastructure.

While the Cannes Film Festival was able to proceed with its closing events, the power outage serves as a reminder of the potential threats to public safety, as seen when a Western Washington bomb cyclone left hundreds of thousands without power, and the importance of robust security measures to safeguard against such incidents.

 

 

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Germany's Energy Crisis Deepens as Local Utilities Cry for Help

Germany energy liquidity crisis is straining municipal utilities as gas and power prices surge, margin calls rise, and Russian supply cuts bite, forcing state support, interventions, and emergency financing to stabilize households and businesses.

 

Key Points

A cash squeeze on German municipal utilities as soaring gas and power prices trigger margin calls and funding gaps.

✅ Margin calls and spot-market purchases strain cash flow

✅ State liquidity lines and EU collateral support proposed

✅ Gazprom cuts, Uniper distress heighten default risks

 

Germany’s fears that soaring power prices and gas prices could trigger a deeper crisis is starting to get real. 

Several hundred local utilities are coming under strain and need support, according to the head of Germany’s largest energy lobby group. The companies, generally owned by municipalities, supply households and small businesses directly and are a key part of the country’s power and gas network.

“The next step from the government and federal states must be to secure liquidity for these municipal companies,” Kerstin Andreae, chairwoman of the German Association of Energy and Water Industries, told Bloomberg in Berlin. “Prices are rising, and they have no more money to pay the suppliers. This is a big problem.”

Germany’s energy crunch intensified over the weekend after Russia’s Gazprom PJSC halted its key gas pipeline indefinitely, a stark wake-up call for policymakers to reduce fossil fuel dependence. European energy prices have surged again amid concerns over shortages this winter and fears of a worst-case energy scenario across the bloc. 

Many utilities are running into financial issues as they’re forced to cover missing Russian deliveries with expensive supplies on the spot market. German energy giant Uniper SE, which supplies local utilities, warned it will likely burn through a 7 billion-euro ($7 billion) government safety net and will need more help already this month.

Some German local utilities have already sought help, according to a government official, who asked not to be identified in line with briefing rules.  

With Europe’s largest economy already bracing for recession, Chancellor Olaf Scholz’s administration is battling on several fronts, testing the government’s financial capacity. The ruling coalition agreed Sunday on a relief plan worth about 65 billion euros -- part of an emerging energy shield package to contain the fallout of surging costs for households and businesses. 

Starting in October, local utilities will have to pay a levy for the gas acquired, which will further increase their financial burden, Andreae said.

Margin Calls
European gas prices are more than four times higher than usual for this time of year, underscoring why rolling back electricity prices is tougher than it appears for policymakers, as Russia cuts supplies in retaliation for sanctions related to its invasion of Ukraine. When prices peak, energy companies have to pay margin calls, extra collateral required to back their trades.

Read more: Energy Trade Risks Collapsing Over Margin Calls of $1.5 Trillion

The problem has hit local utilities in other countries as well. In Austria, the government approved a 2 billion-euro loan for Vienna’s municipal utility last month. 

The European Union is also planning help, floating gas price cap strategies among other tools. The bloc’s emergency measures will include support for electricity producers struggling to find enough cash to guarantee trades, according to European Commission President Ursula von der Leyen.

The situation has worsened in Germany as some of the country’s big gas importers are reluctant to sell more supplies to some of municipal companies amid fears they could default on payments, Andreae said. 

 

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