Understanding the European energy crisis through structural causal models

Natural gas supplies in Europe were disrupted and energy prices soared in the
context of Russia’s invasion of Ukraine. Electricity prices in France experienced
the largest relative increase among European countries, even though the share
of natural gas in the electricity mix is small compared to its neighbours. In this
article, we demonstrate the importance of causal statistical methods and
propose causal graphs to investigate the French and Spanish electricity mar-
kets and pinpoint key influencing factors on electricity prices and net exports.
We demonstrate that a causal approach resolves paradoxical results of simple
correlation studies and enables a quantitative analysis of indirect causal effects
and what-if scenarios. We introduce a linear structural causal model as well as
non-linear tree-based machine learning combined with Shapley Flow values.
The models elucidate the interplay of gas prices and the unavailability of
nuclear power plants during the energy crisis as the high unavailability made
France dependent on imports.