Energy prices remain volatile in the markets. Railways, as a largely electrified mode of transport, are significantly impacted by the high energy prices and face additional yearly costs estimated at €10 billion for the sector. This is causing major concern for the financial sustainability of railway operations.
CER Executive Director Alberto Mazzola said: “We must avoid a reverse modal shift, with logistics moving from less polluting to more polluting transport modes. However, this is what we will get if electricity prices are not lowered for Services of General Economic Interest such as railways. Failure to redress the situation as a matter of urgency will jeopardize all efforts made in the last decade as well as policies formulated for 2030 and 2050 to promote the green transition of European mobility.”
With 80% of all passenger and freight kilometers powered by electric traction, rail is the largest single electricity customer in Europe. According to Eurostat data, railways consume approximately 50 billion kilowatt-hours of electric power per year. This corresponds to 2% of electricity available for consumption in EU27.
CER consulted railway companies in October to gather the most recent information on electricity price trends and corresponding support measures in mitigating the energy crisis. According to the survey:
- European railways on average already pay €200/MWh for electricity. Depending on the type of energy contract, companies have been exposed to prices up to €870 /MWh.
The estimated price for 2023 ranges from €300 to €400/MWh. It has to be noted that rail freight operators are forecasting an average price of €500/MWh, which is further hampering rail’s intermodal competitiveness since diesel prices experienced a relatively smaller degree of increase in the last months.
Despite earlier sector calls, hardly any support is available to the sector for the time being. While a few Member States are considering State aid measures, rail undertakings are not receiving sufficient support.
The outlook is worrying and it is too costly for railway companies to secure affordable prices or any fixed short-term contracts for the time being. Without any intervention from Member States, higher electricity prices will eventually lead to the diversion of rail traffic or even a reverse modal shift to more energy-intensive but cheaper oil-reliant road transport, contrary to the targets of the EU Sustainable and Smart Mobility Strategy.
Moreover, with railways playing a strategic role in energy transport (as seen in the prioritization of rail freight services in Germany or Poland), CER reiterates that railways should be protected from any demand reduction targets on energy.