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What is the Cost of Europe’s Energy Crisis?

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What is the Cost of Europe’s Energy Crisis?

What is the Cost of Europe’s Energy Crisis?

Europe is scrambling to cut its reliance on Russian fossil fuels.

As European gas prices soar eight times their 10-year average, countries are introducing policies to curb the impact of rising prices on households and businesses. These include everything from the cost of living subsidies to wholesale price regulation. Overall, funding for such initiatives has reached $276 billion as of August.

With the continent thrown into uncertainty, the above chart shows allocated funding by country in response to the energy crisis.

The Energy Crisis, In Numbers

Using data from Bruegel, the below table reflects spending on national policies, regulation, and subsidies in response to the energy crisis for select European countries between September 2021 and July 2022. All figures in U.S. dollars.

CountryAllocated Funding Percentage of GDPHousehold Energy Spending,
Average Percentage
🇩🇪 Germany$60.2B1.7%9.9%
🇮🇹 Italy$49.5B2.8%10.3%
🇫🇷 France$44.7B1.8%8.5%
🇬🇧 U.K.$37.9B1.4%11.3%
🇪🇸 Spain$27.3B2.3%8.9%
🇦🇹 Austria$9.1B2.3%8.9%
🇵🇱 Poland$7.6B1.3%12.9%
🇬🇷 Greece$6.8B3.7%9.9%
🇳🇱 Netherlands$6.2B0.7%8.6%
🇨🇿 Czech Republic$5.9B2.5%16.1%
🇧🇪 Belgium$4.1B0.8%8.2%
🇷🇴 Romania$3.8B1.6%12.5%
🇱🇹 Lithuania$2.0B3.6%10.0%
🇸🇪 Sweden$1.9B0.4%9.2%
🇫🇮 Finland$1.2B0.5%6.1%
🇸🇰 Slovakia$1.0B1.0%14.0%
🇮🇪 Ireland$1.0B0.2%9.2%
🇧🇬 Bulgaria$0.8B1.2%11.2%
🇱🇺 Luxembourg$0.8B1.1%n/a
🇭🇷 Croatia$0.6B1.1%14.3%
🇱🇻 Lativia$0.5B1.4%11.6%
🇩🇰 Denmark$0.5B0.1%8.2%
🇸🇮 Slovenia$0.3B0.5%10.4%
🇲🇹 Malta$0.2B1.4%n/a
🇪🇪 Estonia$0.2B0.8%10.9%
🇨🇾 Cyprus$0.1B0.7%n/a

Source: Bruegel, IMF. Euro and pound sterling exchange rates to U.S. dollar as of August 25, 2022.

Germany is spending over $60 billion to combat rising energy prices. Key measures include a $300 one-off energy allowance for workers, in addition to $147 million in funding for low-income families. Still, energy costs are forecasted to increase by an additional $500 this year for households.

In Italy, workers and pensioners will receive a $200 cost of living bonus. Additional measures, such as tax credits for industries with high energy usage were introduced, including a $800 million fund for the automotive sector.

With energy bills predicted to increase three-fold over the winter, households in the U.K. will receive a $477 subsidy in the winter to help cover electricity costs.

Meanwhile, many Eastern European countries—whose households spend a higher percentage of their income on energy costs— are spending more on the energy crisis as a percentage of GDP. Greece is spending the highest, at 3.7% of GDP.

Utility Bailouts

Energy crisis spending is also extending to massive utility bailouts.

Uniper, a German utility firm, received $15 billion in support, with the government acquiring a 30% stake in the company. It is one of the largest bailouts in the country’s history. Since the initial bailout, Uniper has requested an additional $4 billion in funding.

Not only that, Wien Energie, Austria’s largest energy company, received a €2 billion line of credit as electricity prices have skyrocketed.

Deepening Crisis

Is this the tip of the iceberg? To offset the impact of high gas prices, European ministers are discussing even more tools throughout September in response to a threatening energy crisis.

To reign in the impact of high gas prices on the price of power, European leaders are considering a price ceiling on Russian gas imports and temporary price caps on gas used for generating electricity, among others.

Price caps on renewables and nuclear were also suggested.

Given the depth of the situation, the chief executive of Shell said that the energy crisis in Europe would extend beyond this winter, if not for several years.

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Energy Shift

Mapped: Nuclear Reactors in the U.S.

America has 92 reactors in operation, providing about 20% of the country’s electricity.

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Nuclear Reactors in the U.S.

Mapped: Nuclear Reactors in the U.S.

The United States is the world’s largest producer of nuclear power, representing more than 30% of the world’s nuclear power generation.

America has 92 reactors in operation, providing about 20% of the country’s electricity.

The above infographic uses data from the International Atomic Energy Agency to showcase every single nuclear reactor in America.

Nuclear Development

Nuclear power in the U.S. dates back to the 1950s.

George Westinghouse produced the first commercial pressurized water reactor in 1957 in Shippingport, Pennsylvania. The technology is used in approximately half of the 450 nuclear power reactors worldwide.

Today, over 30 different power companies across 30 states operate nuclear facilities in the U.S., and most nuclear power reactors are located east of the Mississippi River.

Illinois has more reactors than any state, with 11 reactors and the largest total nuclear electricity generation capacity at about 11,582 megawatts (MW). Meanwhile, the largest reactor is at the Grand Gulf Nuclear Station in Port Gibson, Mississippi, with a capacity of about 1,500 MW.

Most American reactors in operation were built between 1967 and 1990. Until 2013 there had been no new constructions started since 1977, according to the World Nuclear Association.

Usually, U.S. power reactors receive a license to operate for 60 years. The oldest operating reactor, Nine Mile Point Unit 1 in New York, began commercial operation in December 1969. The newest reactor to enter service, Watts Bar Unit 2, came online in 2016.

The Future of Nuclear Power in the U.S.

U.S. nuclear power’s capacity peaked in 2012 at about 102,000 MW, with 104 operating nuclear reactors operating.

US nuclear generation and capacity

Since nuclear plants generate nearly 20% of U.S. electricity and about half of the country’s carbon‐free electricity, the recent push from the Biden administration to reduce fossil fuels and increase clean energy will require significant new nuclear capacity.

Today, there are two new reactors under construction (Vogtle 3 and 4) in Georgia, expected to come online before 2023.

Furthermore, some of the Inflation Reduction Act provisions include incentives for the nuclear industry. Starting in 2024, for example, utilities will be able to get a credit of $15 per megawatt-hour for electricity produced by existing nuclear plants. Nuclear infrastructure projects could also be eligible for up to $250 billion worth of loans to update, repurpose, and revitalize energy infrastructure that has stopped working.

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Energy Shift

Visualizing China’s Dominance in the Solar Panel Supply Chain

The supply chain is key for the renewable energy revolution, and this chart visualizes where the world’s solar panels are manufactured.

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visualization of global solar panel manufacturing

China’s Dominance in the Solar Panel Supply Chain

Many governments are investing in renewable energy sources like solar power, but who controls the manufacturing of solar photovoltaic (PV) panels?

As it turns out, China owns the vast majority of the world’s solar panel supply chain, controlling at least 75% of every single key stage of solar photovoltaic panel manufacturing and processing.

This visualization shows the shares held by different countries and regions of the key stages of solar panel manufacturing, using data from the International Energy Agency (IEA).

Solar Panel Manufacturing, by Country and Stage

From polysilicon production to soldering finished solar cells and modules onto panels, China has the largest share in every stage of solar panel manufacturing.

Even back in 2010, the country made the majority of the world’s solar panels, but over the past 12 years, its average share of the solar panel supply chain has gone from 55% to 84%.

China also continues to lead in terms of investment, making up almost two-thirds of global large-scale solar investment. In the first half of 2022, the country invested $41 billion, a 173% increase from the year before.

Country/RegionSolar Panel DemandAverage Share of Solar Panel Manufacturing Capacity
China36.4%84.0%
Europe16.8%2.9%
North America17.6%2.8%
Asia-Pacific13.2%9.1%
India6.9%1.3%
Rest of the World9.1%0.8%

Source: IEA
Note: Percentages may not add up to 100% due to rounding

After China, the next leading nation in solar panel manufacturing is India, which makes up almost 3% of solar module manufacturing and 1% of cell manufacturing. To help meet the country’s goal of 280 gigawatts (GW) of installed solar power capacity by 2030 (currently 57.9 GW), in 2022 the Indian government allocated an additional $2.6 billion to its production-linked incentive scheme that supports domestic solar PV panel manufacturing.

Alongside China and India, the Asia-Pacific region also makes up significant amounts of solar panel manufacturing, especially modules and cells at 15.4% and 12.4% respectively.

While Europe and North America make up more than one-third of the global demand for solar panels, both regions make up an average of just under 3% each across all stages of actually manufacturing solar panels.

Too Little Too Late to Diversify?

China’s dominance of solar photovoltaic panel manufacturing is not the only stranglehold the country has on renewable energy infrastructure and materials.

When it comes to wind, in 2021 China built more offshore wind turbines than all other countries combined over the past five years, and the country is also the leading producer and processor of the rare earth minerals essential for the magnets that power turbine generators.

In its full report on solar panel manufacturing, the IEA emphasized the importance of distributing global solar panel manufacturing capacity. Recent unexpected manufacturing halts in China have resulted in the price of polysilicon rising to 10-year highs, revealing the world’s dependence on China for the supply of key materials.

As the world builds out its solar and wind energy capacity, will it manage to avoid repeating Europe’s mistakes of energy import overdependence when it comes to the materials and manufacturing of renewable energy infrastructure?

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