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The Ukrainian conflict has resulted in cuts to natural gas deliveries from Russia and in half-empty water reservoirs in Norway.
On Tuesday, the Confederation of Danish Industry (DI) published a report showing that the energy bills of businesses in Denmark have increased by a total of 45.8 billion Danish kroner (DKK) (US$6.56 billion) in 2022.
"In 2022, the prices of electricity and gas have reached levels that we have never seen before," Industry Director at DI's Energy Department Troels Ranis said.
Gas and electricity prices increased by DKK 15.7 billion and DKK 30.1 billion, respectively, in 2022 compared to 2019, Denmark's last normal year of energy expenditure.
"For many companies, energy costs had previously been a relatively stable expense, but this has turned completely upside down this year. Now energy prices have become one of the first things that business leaders focus on in the morning," Ranis said.
Endless waves of strikes in the UK, same for France and other European countries. People can't live on their current wages with the inflation. The UK government is broke, thus they can't give pay raises. Even if they do, inflation will worsen with more pay. pic.twitter.com/r1N63WLV04
The DI report attributes the rising costs to the Ukrainian conflict, which has resulted in cuts to natural gas deliveries from Russia and in "half-empty water reservoirs in Norway." All these, coupled with "periods of little wind," have caused the price of electricity to skyrocket throughout the year.
The trend of high energy prices is expected to continue into 2023 as fixed priced futures contracts for gas and electricity delivery expire, resulting in more companies being forced to pay a higher price for energy.
"Energy prices can fluctuate a lot over the course of a year, but the figures show that companies will be hard pressed by high energy prices in the coming year," Ranis said.