Expert Predicts End of Cheap Energy for Belgian Households

As Belgium continues to recover from the shock of skyrocketing energy prices during the global energy crisis, experts are warning that households may never see energy costs return to pre-crisis levels.

While retail energy prices have fallen significantly from their alarming peaks in 2023, the relief is expected to be temporary, with ongoing challenges for consumers and businesses.

According to Damien Ernst, a professor at the University of Liège who specializes in electricity and energy systems, the energy prices that surged during the Russian invasion of Ukraine in 2022 are unlikely to drop back to the levels experienced before the crisis.

Speaking to The Brussels Times, Ernst outlined that, although some price relief is expected, the era of government energy subsidies and significant price reductions is over.

A Glimpse into Belgium’s Energy Crisis

The energy crisis that began in 2022 after Russia’s invasion of Ukraine placed enormous pressure on European households and industries, particularly in Belgium.

As a country heavily reliant on natural gas for heating and electricity production, Belgium was exposed to the full force of the energy price spikes, alongside its neighbors France, Germany, and the Netherlands.

The crisis led to significant strain on energy supply chains, as Europe faced an unprecedented cut-off of Russian gas.

For Belgium, which sources about 40% of its electricity from nuclear power, with natural gas and wind contributing 21% and 19% respectively, the energy crisis highlighted the vulnerability of a grid that had become increasingly dependent on volatile international energy markets.

The increased cost of liquefied natural gas (LNG), exacerbated by sanctions and geopolitical tensions, has made energy costs far more unpredictable.

Professor Ernst pointed out that prior to the crisis, the price of gas in Europe was about €18 per megawatt-hour (mWh), but it surged to over €300 per mWh by the peak of the crisis in September 2023. This drastic increase, which he called “hugely catastrophic for consumers,” has continued to have lasting effects.

“Prices Will Never Go Back” to Pre-Crisis Levels

Despite a significant reduction in prices since the crisis’s height, Ernst predicts that gas prices will likely never return to their pre-2021 levels.

As of now, gas prices hover around €40 per mWh, more than double what they were before the crisis. This sustained increase in the cost of gas has also kept electricity prices high, as the latter remains closely tied to gas prices.

Ernst emphasized that the direction of gas prices moving forward will largely depend on the weather and the country’s ability to generate renewable energy.

“If we have a warm winter with a lot of wind, prices will go down. However, if we have a very cold winter with little wind, we may deplete our gas reserves before the end of the season, pushing prices back up,” he warned.

This winter, he noted, is particularly uncertain. Early forecasts show that Belgium is facing a cooler period with little wind, which could drive up energy demand and strain gas reserves. If such a scenario unfolds, Belgium could see prices spike to €100 per mWh again.

On the other hand, a mild winter with favorable wind conditions could bring prices down to around €30 to €35 per mWh. However, even this lower price would still remain significantly higher than the pre-crisis rates.

Trump’s Potential Impact on European Gas Prices

Looking beyond the weather, Ernst speculated that global political developments, particularly in the United States, could play a role in shaping European energy prices.

The possibility of Donald Trump returning to the White House in the next U.S. presidential election could have a profound impact on gas prices, Ernst suggested.

While Trump’s policies have historically favored increased energy production and exports, particularly of LNG, this shift could affect the global energy supply.

Under President Biden’s administration, restrictions were placed on the development of new LNG export terminals, as part of efforts to address climate change.

However, Trump’s return to power could lift these restrictions, leading to an increase in global LNG supply, which could subsequently lower gas prices.

“If Trump comes back to power, he may lift bans on the export of LNG, increasing supply to worldwide markets and potentially decreasing gas prices,” Ernst explained.

End of Government Support for Energy Bills

As for Belgium’s ongoing energy crisis, Ernst underscored that the situation is far from over. While energy prices have come down from their peak, they remain high enough to cause significant financial strain for households and businesses alike.

“The energy crisis is not over,” Ernst said. “Prices are still high enough to impoverish European households and make life difficult for industries that rely on electricity and gas for production.”

However, Ernst believes that the era of extensive government support for energy bills is now behind us.

In the face of ongoing high prices, European governments are unlikely to continue offering the substantial subsidies that were introduced during the worst of the crisis.

“The governments have already spent a lot on subsidies, and now that the prices are no longer at their peak, they are not likely to offer as much help to consumers,” he noted.

This marks a significant shift in the approach to energy price management. Throughout 2022 and 2023, many European governments, including Belgium’s, provided financial relief to households and businesses struggling with soaring energy costs.

But with the normalization of prices—albeit at still elevated levels—governments are retreating from these extensive support measures. As a result, consumers may find themselves facing higher energy bills without the safety net of government assistance.

Long-Term Implications for Belgian Households

As winter approaches, Belgian households will need to prepare for another season of unpredictable energy prices.

With the end of government subsidies, individuals and businesses alike will have to rely on energy-saving measures and potentially higher savings to manage costs.

Ernst urged the public to be mindful of their energy consumption, as energy prices will remain volatile for the foreseeable future.

He also encouraged Belgium to invest more in renewable energy sources, such as wind and solar power, in an effort to reduce dependency on imported gas.

While the worst of the energy crisis may be behind Belgium, the economic fallout will likely persist for some time. With energy prices expected to remain significantly higher than before the crisis, and with government support fading away, households and businesses will have to adapt to a new normal in energy consumption.

The question remains: just how much longer will Europe’s energy crisis continue to cast its shadow over the continent?