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ENERGY

EXPLAINED: How reliant is Austria on Russia for energy?

As Russia’s invasion of Ukraine continues and economic sanctions take hold, The Local takes a closer look at how much Austria relies on Russia for energy.

How will energy supplies be impacted by the Russia-Ukraine war? Photo by Ina FASSBENDER / AFP
The City of Vienna has launched a new financial package to help with energy costs. Photo by Ina FASSBENDER / AFP

Austria is heavily dependent on Russia to fulfil its energy demands, like many other countries in Central and Eastern Europe.

As a result, Russia’s invasion of Ukraine and subsequent economic sanctions by the EU, UK, Canada, USA and other countries around the world has raised fears about the future of Russian energy supplies.

In early March, Federal Chancellor Karl Nehammer pledged support of EU sanctions against Russia but warned there could be “consequences” for Austria. 

What does this mean and how could the country’s energy supply be impacted?

Heavily dependent on Russian gas

Prior to Russia’s invasion of Ukraine, Elisabeth Christen, Senior Economist at the Austrian Institute of Economic Research (Wifo) told The Local that 80 percent of Austria’s gas is imported from Russia and that most of the EU is heavily dependent on Russian gas.

However, Christen said Russia’s economy is also very reliant on capital from exporting gas, so while Austria – and Europe – relies on Russia to meet energy demands, it is a “mutual dependence”.

FOR MEMBERS: UPDATED: How Austria could be impacted by the war in Ukraine

In fact, across the EU, 47 percent of all gas supplies come from Russia. Norway is the second largest gas importing country to Europe, supplying 21 percent of all gas to EU countries.

The EU is now bringing forward plans to switch to greener forms of energy and is openly discussing ways to separate itself from a reliance on Russian oil and gas. 

Where else does Austria import gas from?

Apart from the 80 percent from Russia, Austria imports ten percent of gas from Norway, five percent from Germany and the rest from other sources. 

To compare, Germany gets 32 percent of its gas from Russia, 20 percent from Norway, 12 percent from the Netherlands and the rest from elsewhere, according to Reuters.

In the UK, a government fact sheet shows only four percent of the country’s total gas supply is imported from Russia. The majority of the UK’s supply comes from the UK Continental Shelf and Norway.

Could Austria’s gas supply be affected by the conflict?

One big question – both before Russia’s invasion of Ukraine and since the announcement of EU sanctions –  is whether Austria could run out of gas. Possible scenarios include supplies being interrupted by military conflict in or in retaliation by Russia’s President Vladimir Putin.

Currently, gas is supplied from Russia to European countries (including Austria) on a long-term contractual basis and Russia is still fulfilling these contracts. 

READ MORE: How to save money on fuel costs in Austria

However, Austria’s reserve storage of gas is lower than in previous years at just around 25 percent.

Christen said: “Compared to other years the storage level is lower because the winter has been cold and there is a huge supply issue at the moment due to the rebound of economic activity [following Covid-19 lockdowns], so Austria’s gas storage is not as good as in previous years.”

In the worst case scenario of gas reserves running low, Christen said existing supplies could be limited within Austria and Liquified Natural Gas (LNG) could be sourced from other countries.

Following Russia’s dismissal from the Swift payment system, this now means transactions between EU countries and Russia are no longer legally allowed to take place. This could cause problems in paying for future gas supplies. 

What action is Austria taking to mitigate the risk to gas supplies?

While Austria’s energy supply for the coming weeks and months is secure, there are concerns about next winter.

Der Standard reports that the Ministry of Climate Protection is working on a new law to mandate a specific reserve supply of gas in Austria, which is expected to be voted on in the summer.

Currently, gas supply companies and importers are not obliged to store gas.

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The Federal Government is also working on rapid expansion plans of renewable energy, such as wind, solar and biogas (created by the breakdown of organic matter like food and animal waste).

Additionally, the government is exploring alternative sources of gas from the Middle East, as well as supplies of LNG. It has been suggested that LNG could be routed to Austria from the north Adriatic coast in Italy via the Adria-Vienna pipeline.

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COST OF LIVING

Where are energy prices going up (again) in Austria?

On Wednesday, energy companies announced that some households in Austria will be paying even more for gas and electricity soon. Here's what you need to know.

Where are energy prices going up (again) in Austria?

On Wednesday August 3rd, EVN and Wien Energie – both part of the Energieallianz Austria (EAA) group – announced they will be increasing energy prices from next month.

According to ORF, the increase announced by Lower Austria energy supplier EVN is “substantial” and will apply to gas and electricity.

EVN – which is mostly state-owned – blamed the move on price increases on the international wholesale markets.

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Higher prices in Lower Austria

From September 1st, customers that get both gas and electricity from EVN should expect to pay at least €100 more a month. Around 50 percent of EVN customers – or those on a “classic tariff” – are expected to be impacted by the price increases. The increases won’t affect households on ‘price guarantee’ contracts.

However, to counteract the extra costs, EVN has also announced some money-saving measures for customers, such as registering in the customer portal, opting for email invoices or paying by direct debit. Additionally, a social fund of €3 million has been set up to help hardship cases.

In the future, EVN intends to adjust prices twice a year on April 1st and October 1st.

Increases (again) in Vienna prices

At Wien Energie, prices for electricity will be going up by €36 a month (based on an annual consumption of 2,000 kWh), and gas prices will increase by €60 a month (based on 8,000 kWh), reports Der Standard.

Customers will be notified by letter in August and the new rates will be in effect from September 1st. Those with a price guarantee or floating tariff will not be affected.

READ MORE: Austria starts anti-inflation payments with €180 bonus family allowance

EEA cited increases on the Austrian Electricity and Gas Index as the reason for the price increase. Since August 2021, the cost of electricity has gone up by 247 percent and gas by 323 percent.

A price adjustment in line with the index was due to come into effect at EAA in January 2023, but this has been brought forward.

Price caps and government subsidies

On July 20th, the Lower Austria state government announced a price cap on electricity prices to mitigate the financial impact of rising energy costs in the province.

As of September, residents in Lower Austria will be able to apply for the Strompreisrabatt (electricity price discount) to receive a price cap of 11 cents per kilowatt hour of power used.

The initiative will cover 80 percent of an average household consumption and will cost €250 million, reports Kurier. The funding will run until September 30th 2023.

Governor of Lower Austria Johanna Mikl-Leitner said: “Our electricity price relief brings balanced support for all Lower Austrians and creates a clear incentive to save energy.”

READ ALSO: Inflation at 9.2% in July: How to beat rising prices in Austria

The subsidy will be deducted directly from the energy bill from October and the calculation will be based on the number of people living in a household.  

The Austrian Federal Government then announced a similar nationwide initiative one week later.

According to a statement released on July 27th, the aim of the electricity price cap is to “support the Austrian population to ensure an affordable energy supply for a certain basic need”.

At the time of the announcement, no further details were provided but the government said that the conditions for the price cap would be developed by the end of August.

EVN and Wien Energie said that these measures by the government of Lower Austria and the federal government should help to mitigate the impact of rising energy costs on households. 

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