Europe's Energy Crisis: Can Tech Companies Help?
From August 2021, Europe’s energy crisis was inevitable. At the end of summer, it was already obvious that gas storage levels were low and prices spiked. When Germany paused the certification of the Nord Stream 2 gas pipeline from Russia in November, European natural gas prices rose again, this time by 17%. By the end of 2021, Bloomberg already estimated that European household energy bills were to rise an average of 54% in 2022.
Evolution of energy prices, Oct 2020-Jan 2022. Source: IEA
How did this situation occur? A confluence of interrelated factors led to the EU energy crisis, and each is worth specific research. However, let's try to name a few:
- A spike in energy demand due to the post-Covid economic recovery
- An abnormally cold spring in Northern Europe
- Reduced shares of wind power in electricity generation
- The EU’s ambitious climate agenda, which led to tightened Emissions Trading System (ETS) rules
- Record-high post-Covid inflation (5.1%) across eurozone countries
- Fractious geopolitics
Of all the highlighted reasons, geopolitics turned out to be the proverbial straw. At the end of 2021, Russia continued to fulfil its contractual obligations, however, Gazprom was ‘unwilling’ to deliver more, blaming wildfires and disruptions caused by Covid-19 for its curtailed gas capacity in 2021.
At the beginning of 2022, it was clear that this was part of Russia's pre-war preparation efforts. After February 24, when Russia launched its large-scale invasion of Ukraine, the situation got even worse.
How the war in Ukraine is changing the EU energy market
The invasion of Ukraine made both Europe’s energy dependence on Russia and its already slow transition to renewable energy painfully clear. Predating the invasion, the European Green Deal stipulated a net 55% reduction of emissions by 2030 and climate neutrality by 2050. However, due to the economic sanctions imposed on Russia and the growing lack of oil and gas, the outlook is grim. The first anti-crisis measures include the continued use of old nuclear power stations and heavy reliance on coal.
Such forced decisions seem to reverse the decade-long decrease in greenhouse gas emissions from the power sector in Europe. And it's partially true. However, the EU hasn’t given up on its efforts to replace Russian gas with affordable and sustainable energy.
On March 8, 2022, the European Commission issued a plan to reduce Europe's dependency on Russian fossil fuels before 2030. Among other things, this plan includes increased support and investment in the clean energy sector.
Clean energy as a solution to Europe's energy crisis
Europe is on the brink of a major energy crisis, considering Russia’s threat to cut off natural gas supplies. The short-term solution is to re-open coal mines and source of gas and petrol from suppliers such as Qatar, Azerbaijan, and the United States instead of Russia. France and Germany are about to promote nuclear power energy. However, to ensure long-term energy independence, governments, as well as ordinary citizens, should act now and choose clean energy solutions.
ChangeNOW's founder and CEO, Santiago Lefebvre, believes the only way to become energy independent from Russia is to stop using fossil fuels completely. To achieve this, Lefebvre says, Europe must expand its green investments, propelling Europe even faster toward renewable energy. Of course, moving from fossil fuels to sustainable energy projects and building a new energy infrastructure mean not only a cleaner and more secure future, but also a hard transition period. But there is no doubt that we will see an increase in clean energy investments in the foreseeable future.
We can already suppose that the global clean energy technologies market size will surpass the predicted US$423 billion by 2026. The ongoing discussion on simplifying regulatory and tax legislation for green energy projects are particularly encouraging. For instance, Kadri Simson, the EU's envoy for energy, says that Europe should consider changing laws to support renewable energy projects.
We stand to witness the beginning of a golden era for clean energy startups of various types: from solar panel production and rental to apps that help manage household energy consumption. You'll be very welcome to the market if you have viable ideas to improve the future of the European and global energy industry.
How can energy startups help improve the situation?
You might not have heard as much about renewable energy startups given the gas lobby’s touting of natural gas as a source of low-emission energy. However, for more than a decade such companies have been at the cutting edge of the clean energy market. Moreover, they are preparing a whole ecosystem for the new energy market.
While some companies improve existing solutions (for example, VisBlue and its energy storage system) or discover new sources of green energy (like Bioo and its technology of organic substances decomposition to get electricity), others specialise in creating infrastructure (for instance, Beridi's concrete-based platform for offshore wind turbines).
The growth of sustainable green technology startups is not only bringing new sources of energy to the public but it’s also opening the door to more conscious energy decisions. There are a number of innovative solutions that can help consumers lower their energy bills and make their consumption more efficient, as well as simplify the transition to clean energy.
For instance, startups can help households harness solar energy by facilitating its use and management. MadAppGang's software solution for Evergen, an Australian energy startup, eliminates any management concerns for homeowners who use solar panels. Using artificial intelligence (AI), we developed a system that automatically stores energy according to weather forecasts, enables energy-efficient management, and facilitates the purchase of energy at favourable rates. This way, the customer gets maximum benefits with minimal effort.
The Evergen app.
Another example is Google’s Project Sunroof, a 3D modelling tool that shows homeowners how much solar power their roof could generate. By calculating the amount of space on a roof for solar panels, and analysing the positioning of the sun and the average yearly temperature of the area, Project Sunroof can also estimate electricity bill savings. This remarkable initiative may inspire thousands of homeowners to switch to solar energy. Having rough calculations, it's always easier to make such big decisions and plan family budgets.
An example of the estimated solar potential calculations. Source: Project Sunroof
European governments will seek to diversify energy sources to reduce the risk of further market turmoil. Along with growing investments in alternative energy startups, the diversification policy may also simplify bureaucracy. This will create a favourable climate and a one-in-a-million chance for startups in the sector. Alternative energy ventures that seemed promising from a 20-year perspective may become industry unicorns in just 4 to 5 years. Consequently, now is the best time to enter the market.
Show the world your innovative idea and don't worry about how to bring it to fruition. You can rely on MadAppGang to develop even the most complicated software for your project. With our experience in the energy sector and our expertise building modern cloud apps, we will get you off to a winning start. Using cutting-edge technologies, advanced tools, and modern development practices, our team produces results that add real value to businesses. Get in touch with us and let's talk about your project. Together, we can secure, clean, and smarten the future of the world's energy market.