IMAD notes decline in energy consumption in autumn

In September, most Slovenian companies expected to cut production by the end of the year in the face of the energy crisis. This has been reflected in electricity consumption, which was much lower last month year-on-year, said the Institute of Macroeconomic Analysis and Development (IMAD). The same goes for natural gas consumption in recent months.

Both trends are a result of price hikes, the government’s macroeconomic forecaster noted, as it announced that households too were likely to reduce their energy consumption during the energy crisis despite the government’s capping of natural gas prices.

Natural gas consumption was down by 14% in August and by 11% in September compared to the comparable average consumption in the previous five years, and the decline in October is expected to be even bigger based on the data available so far.

From the beginning of the year, the figure has dropped by more than a tenth, compared to the previous five years, which IMAD thinks is mainly a result of decreased industrial consumption.

From 1 August this year to 31 March next year, EU member states are committed to reduce natural gas consumption by 15% compared to the average in the same period over the past five years. In Slovenia, consumption has been down 14.8% since the beginning of August, preliminary data shows.

Electricity consumption on the distribution network declined by 4.4% in September year-on-year. The main reason was again lower industrial consumption (down 5.1%), mainly due to lower consumption by some energy-intensive companies. They have reduced their production volumes in the face of high electricity prices, but they may have improved their energy efficiency as well, IMAD said.

In September, household electricity consumption was also down year-on-year, by 3.9%, whereas small business consumption was roughly the same.

While manufacturing output increased in August, particularly in high-technology industries but also in medium-high-technology sectors, output in low-technology industries has been mostly flat since the middle of the year. On average, manufacturing output in the first eight months of this year was up 6.2% compared to the same period last year.

Motor vehicle production and activities in some less technology-intensive industries, including more energy-intensive sectors, remained low. The outlook for the rest of the year deteriorated further in September, and a majority of surveyed companies expect production to be reduced by the end of the year, amid downgraded export expectations, IMAD said in a press release.

The Chamber of Commerce and Industry (GZS) looks with concern at the soaring energy prices, as more and more companies are announcing various moves such as productions scale-downs or suspensions, plant closures or shift cuts, GZS’s executive director for industrial policy, Vesna Nahtigal, told the STA.

“Among companies that have already announced measures are Talum, Sij, Goričane. The company MM Količevo last week even announced an extreme measure – employee cuts. We expect to see much more of this in the coming days and weeks,” she said, urging measures to help the economy as soon as possible.

For example, aluminium maker Talum had to reduce production of primary aluminium in electrolysis in October for the third time in less than a year due to the energy market situation, the company said.

The most drastic measure so far was announced by MM Količevo, one of the six paper mills operated by the MM group in Europe, as the company decided to shut down one of its two cardboard machines and reduce their total headcount of 412 employees by as much as a quarter.

The GZS calls on the government to introduce steps such as a cap on the wholesale price of energy products and measures to avoid staff cuts – the furlough and subsidised short-time work schemes.