Europe’s power crisis has ‘very little to do with Putin’: CEO

This image from September 2022 shows a liquefied natural gas tanker arriving at a Dutch port.

Siese Veenstra | AFP | Getty Images

According to Per Lekander, managing partner of Clean Energy Transition LLP, Europe’s electricity crisis has little to do with Vladimir Putin, and it could be argued that the Russian leader’s actions have helped to improve the situation.

During a wide-ranging interview with CNBC’s “Squawk Box Europe” last week, Lekander — formerly a fund manager at Lansdowne Partners — talked about how the situation facing energy markets has evolved in recent months.

“This summer, after Russia cut off the gas … I thought the winter would be very harsh,” he said.

“I really thought it might be the closure of a large part of German industry … widespread layoffs … and it has been so far – much, much better.”

Citing additions to solar power capacity and liquefied natural gas terminals, Lekander emphasized the importance of reducing demand at home.

“I’d say energy demand is down 10%, gas demand is down about 20%, a little higher in industry, a little less … personal, a little more in the north, a little less in the south, but … that’s about it ” he said.

“So I would say the worst supply security situation on the gas side is over.”

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He then told her that while many experts thought the worst was over for now, next year would be worse.

“That’s wrong,” replied the Legend. “And … assuming those gas savings remain — as we can see right now, we’ve got really, really cold weather, we’re still drawing less than typical seasonality.”

“The bottom line is we’re committed to demand savings,” he said. “If we do that and as long as we have access to LNG, I’d say it looks very plausible … we’ll see another year or two of high prices, but I wouldn’t say on the gas side. It’s a security of supply issue.”

However, he said the situation with power is “a little bit different.” “The reason we are experiencing a power crisis in Europe has very little to do with Putin. “I would almost say that Putin has actually improved the situation,” he added.

Expanding his opinion, Lekander explained that, in his opinion, the current situation is due to a number of factors.

“It’s the result of long-term investment in renewables in traditional, long-term red tape, and then the political shutdown of nuclear, coal, lignite, etc.,” he said.

“You could already see it in 2018 and it’s starting to materialize,” he said. “What am I saying, he [it] it’s better now because … some of these closures have been reversed … [in] For example, Germany. Second, you have this 10% drop in demand.”

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Lekander’s comments come amid major disruptions in global energy markets following Russia’s invasion of Ukraine in February.

According to Eurostat, in 2021, the Kremlin was the largest supplier of both natural gas and petroleum oil to the EU, but gas exports from Russia to the European Union decreased this year.

Major European economies are also trying to reduce their consumption and increase supplies from alternative sources for the colder months ahead and beyond.

At the same time, major industrial players such as Germany have decided to restart a number of coal-fired power plants to compensate for the shortage of Russian gas.

As for usage, at the end of September the European Council announced that EU energy ministers had agreed on “emergency measures to lower energy prices”.

“The council agreed to a voluntary overall reduction target of 10% in total electricity consumption and a mandatory 5% reduction in peak hour electricity consumption,” he said.

Security of supply is a hot topic at the moment, and on Wednesday it was announced that the UK and the US were forming a new energy partnership aimed at increasing energy security and reducing prices.

The UK-US Energy Security and Affordability Partnership, as it is known, will be led by the UK-US Joint Action Group, led by officials from both the White House and the UK government.

Among other things, the group will strive to ensure that the market increases the supply of liquefied natural gas from the United States to the United Kingdom.

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