A weather front is bringing still and cloudy weather at the start of the week in some of Europe’s largest electricity markets, resulting in power prices for peak evening periods soaring to 2022 highs.
Across the UK, Germany, and France, the top power markets in Europe, wind and solar power generation is slumping on Monday and is expected to remain below normal until at least the middle of this week. The wind speed slumps will be especially pronounced in Germany, the UK, Belgium, and the Netherlands. This means that the price of electricity will be predominantly set by natural gas-fired plants, which use the most expensive gas in Europe in four years.
Day-ahead prices in France settled at $374 (334 euros) per megawatt-hour (MWh) in an auction on Epex Spot on Monday, the highest level since December 2022, according to data compiled by Bloomberg.
Day-ahead power prices in Germany settled on Monday at $386 (345.64 euros) per MWh, with spikes of above $672 (600 euros) per MWh for some peak evening time slots.
In the UK, the National Energy System Operator issued on Sunday a routine margin notice to warn of tight power supply on Monday morning local time. The notice was canceled on Monday morning, but the warning of some shortfall followed the dip in wind power generation in the weekend.
Separately, low water levels in hydropower reservoirs and soaring natural gas prices are putting upward pressure on power prices in the Nordic countries as winter approaches, Denmark-based energy trader Mind Energy has said.
In its November recap insight, Mind Energy said that “Winter is upon us, and panic is evident across the European energy markets, which had clearly underestimated the seriousness of the situation earlier in the year.”
The price spikes in European natural gas prices in October and the “severe hydrological pressure on the Nordics ahead of winter” could send electricity prices soaring in the coming months, according to the analysts.
By Michael Kern for Oilprice.com
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