According to the latest report from the Europe Commission concerning the cost of energy, European businesses reduced their energy intensity during the last years, but mainly because of the increase in energy taxes faced a price hike of 20%. The increase in the price of natural gas was more moderate at 10%.
Energy price is formed by three components energy, network and taxation. The energy component in electricity decreased by 3% for industrial median consumers and increased by 7% for households. But relative share in the final bill decreased from 46% to 42% for domestic consumers. The network component in electricity increased between 18-30 % for all consumers. The report states that there is room for improvement if European countries work together to achieve better electricity connectivity. The taxation component between 2008 and 2012 increased by 120% for industrial consumers and 30% for households. Increased taxation is due mainly to the 20-20-20 ambition which by 2020 intends to reduce 20% of greenhouse gas emissions, increase energy efficiency by 20% and raise the share of renewable energy to 20%.
Despite of this increase in electricity prices, natural gas was more stable than electricity. Prices increased modestly between 5-10%, which encourages the deployment of CHP plants that can be an incentive for ESCO projects in the near future. This is primarily due to a higher stability in all the components, energy, network and taxation and in some cases even decreased.
Recent years have seen a reduction in energy intensity in most EU economies and a reduction in industrial electricity and gas consumption. In some industrial sectors, however, reductions in electricity and gas could be attributed to decreasing energy intensity as energy efficiency improvements were made and a restructuring of some sectors towards higher value-added products occurred.
Whilst europe has always suffered higher energy prices energy, in recent years the energy price difference between the EU and major economic partners has increased substantially. That makes more relevant the importance of energy efficiency as a competitiveness factor in our globalized environment. European industries improved their efficiency performance, converging towards Japanese levels. The US and China have been also improving their efficiency, but the difference in absolute levels remain substantial.
On average, European domestic customers paid more than twice as much as US ones for electricity, and comparable prices to other countries like Norway, New Zealand and Brazil. European industries however, paid 20% more than companies based in China, about 65% more than companies in India, more than twice than those based in US and Russia, and three times as much as some Middle east countries like Saudi Arabia.
Between 2008 and 2012, European industrial consumers face a 20% increase in real terms in electricity prices. Other parts of the world: Japan +19%, Korea +14%, US -10%. European countries tax natural gas and electricity more heavily than some major other global competitors such as the US and Canada. That means that at a Global level, much is still needed to be done to eliminate subsidies to inefficient fossil fuel that discourages energy efficiency.
SOURCE: ENERGY PRICE TRENDS IN EUROPE: HTTP://EC.EUROPA.EU/ENERGY/DOC/2030/20140122_SWD_PRICES.PDF