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What comes after the energy crisis?

This is not another article about expensive power bills in Europe. That topic has already been tapped. Instead, we want to know: Where do we go from here?

Let’s explore the spectrum of (speculative) scenarios for industries and consumers when it comes to getting and paying for power in the future. From unlikely to likely, here’s country risk expert (and founder of risk mitigation company Corisk) Erlend Bjørtvedt’s take.

Unlikely | Power rationing takes over. Only certain industries will get access. Consumers will have to scale down usage significantly.

“This is an unlikely scenario because rationing would cause enormous harm to the economy with massive losses for Europe’s global competitiveness. I have seen rationing at work in Asia and it is an industry killer. In Europe, market forces are already taking care of scarcity issues when random producers scale down their production through the seasons.”

Somewhat likely | Governments recognize growing costs of power and begin subsidization programs for core industries and consumers

“This is a somewhat likely scenario as the cost issue is already at the core of the EU energy policy agenda. One line of thinking is that climate concerns may contribute to the acceptance of higher energy prices in Europe, as assessed by Germany, Ireland, Denmark, Belgium, and Switzerland in their decision to reject natural gas investments and phase out nuclear power. But their wind and solar alternatives are unstable and will create arbitrary price shifts that complicate voter acceptance and subsidy mechanisms.

“An alternative scenario is an expansion of nuclear and gas applications, as supported by France, Italy, and Eastern Europe. In both of these scenarios, subsidy handouts to consumers will likely persist, but a stand-alone renewable strategy would probably require production subsidies at a level that may be at odds with global trade and climate regulations.”

Very likely | Scaling up nuclear power and more alternative energy sources as governments see no other option to meet demand

“This is a very likely scenario because we already see plans of nuclear expansion in France, Finland, the UK, Hungary, the Czech Republic, and Poland. But nuclear power construction is time-consuming, and the share of nuclear power will decline for at least another decade. 

“When Spain, Denmark, Ireland, and Germany instead turn to renewables, those efforts will be incentivized by rising oil and gas prices, and accelerated renewable investments are therefore highly likely. However, a lasting conflict with Russia will also expand the political and financial scope for nuclear and gas. This may not thwart the funding of renewables short-term, but an enduring conflict with Russia may lead them to compete with nuclear and ‘green’ gas applications for political and financial favor in the longer term.”


Erlend Bjørtvedt’s company Corisk helps Nordic clients understand and manage country risk in demanding markets. He can be contacted at ebb@corisk.no.

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