For energetic “gap” between northern and southeastern Europe, Reuters talks about in its related report, emphasizing the situation that prevails in Greece in the wholesale energy market and how this “translates” into household consumption. The agency presents everyday incidents.

For Athens restaurant owner Christos Kapetanakis, the rent has always been high, but now he is facing what he calls “second rent” as rising electricity bills cut into profits and force him to raise prices, Reuters reports.

Kapetanakis pays between 3,000 and 3,800 euros a month for electricity, a 40% increase since Russia invaded Ukraine in 2022 and triggered a European energy crisis. Electricity used to be 3% of monthly turnover and now it is more like 15%, he said.

“The continued increase in prices, especially in the tourism sector…will lead Greece to become less competitive compared to other Mediterranean countries,” he told the agency from his restaurant in the historic neighborhood of Plaka.

His predicament echoes that of the entire European continent since the Ukraine war disrupted Russian pipeline gas supplies to Europe and forced countries such as Greece to seek more expensive alternatives.

But south-east Europe has felt the impact much more than the north-west. Analysts say that this situation will only get worse as winter approaches, and will have a negative impact on economic growth.

The wholesale price for energy in Greece and Italy in August was 12 times higher than in the Nordic countries, but it was also much higher than other warm-weather southern European countries.

In Greece the highest expenditure

As of 2021, Greece has spent 11 billion euros on energy subsidies to try to protect customers. In 2022, spending rose to 5.3% of GDP – by far the highest rate in the EU and twice that of second-place Italy, according to France-based Enerdata.

Despite Athens’ efforts to protect citizens from rising energy costs, the situation has worsened Greece’s cost-of-living crisis following the 2009-18 debt crisis that reduced wages, pensions and investment in power generation and transfers.

“Increased energy prices and the negative impact on GDP is a tautology,” said Nikos Magginas, senior economist at the National Bank of Greece.

“Increased prices have a negative impact on household consumption and the cost structure for industries, airlines and shipping.”

Much of the ‘contrast’ between south-eastern Europe and its neighbors is due to investment. While the northeast has electricity and natural gas lines that allow for easy energy transfer between states, as well as a strong mix of renewable sources, much of southeast Europe is fragmented and isolated.

Energy storage, which is becoming increasingly important in northern European countries, is non-existent in areas of south-eastern Europe. Germany has 1,668 megawatts (MW) of large-scale storage capacity, compared to zero on mainland Greece, according to figures from LCP Delta, an Edinburgh-based energy consultancy.

“Southeastern Europe and the Balkans lack (electrical) interconnection. Whenever there is a shortage of energy and renewable energy production is low, they find it difficult to import the necessary quantities,” said Henning Glustein, head of energy, climate and resources at Eurasia Group.

By contrast, Spain’s renewable electricity generation has soared over the past decade, thanks in part to EU funding. It produced nearly 60% of its electricity from renewable energy sources in the first half of this year, up from 51% a year ago.

“If you don’t invest, energy prices will stay high,” warned Glustein.

“More must be done”

Europe’s electricity grid is in many ways a great success. In 2022, France increased imports from Germany when nuclear power production declined.

When Russian gas supplies to Europe via Ukraine were halted last week, the impact on prices was lessened because the bloc had found alternatives.

But for some, more needs to be done. After Greece’s electricity prices skyrocketed last summer, Prime Minister Kyriakos Mitsotakis wrote a letter to the European Commission demanding a solution to the “unacceptable” differences in electricity costs across Europe.

Greece is not alone. Much of the Balkans is heavily dependent on fossil fuels and the regional electricity system is weak. Last June, a blackout hit Montenegro, Bosnia, Albania and Croatia when the grid was overloaded by air conditioning needs during a heat wave.

Kosovo, which generates more than 90% of its energy from coal, is struggling to catch up with the rest of Europe in installing more renewable energy.

In December, a tender was launched for the 100 MW wind power installation. However, the World Bank estimates that it needs 100 times more power – at least 10 gigawatts of new power – to meet its goal of eliminating coal use by 2050. This transition is estimated to cost Kosovo 4.5 billion eurosa scary amount for the small economy.

Without sufficient cross-border integration or storage, there is sometimes too much capacity for a market, forcing producers to limit supply.

“If the goal is more specifically to lower prices, the easiest way to do that is to increase the penetration of renewables or nuclear,” said Fabian Ronnigen, analyst at consultancy Rystad Energy.

While Greece has no nuclear power plants, Aristotelis Aivaliotis, secretary general of the Ministry of Energy, is optimistic, noting that renewable energy production is increasing, two new gas-fired power plants are due to start operating this year, and the battery energy storage system will be built until 2028.

Plans also include upgrading electricity connections to Italy, Albania and Turkey by 2031 at a cost of around 750 million euros.

“Wholesale prices will gradually come down… and that will certainly pass on to consumers at some point,” Aivaliotis told Reuters.

Greek household consumers are not convinced. Taxi driver Fekas, who lives in a suburb of Athens, is struggling to pay school fees and allowances for his three children because the electricity bills are so high.

He urges his children to cut back on laptop and tablet use to save energy – a tough call for young children who are glued to their devices.

“We are on the verge of becoming a financially troubled family,” he said. “The government needs to pay attention.”