The electricity market is characterized by significant price fluctuations throughout the year. That will not change in the last weeks of the year. In fact, last week the electricity price rose to an unprecedented high level.
Last Tuesday (21 December) the EPEX Spot quotation set a new record price with €429,84 per MWh. This is a significant step up from the previous highest price of 302,54 per MWh on October 7. After the peak last week, the electricity price fell steadily to finally €170,96 per MWh yesterday (December 27). That is a significant drop, but still a very high price compared to last year. At that time, the electricity price fluctuated around €40 per MWh in the last weeks of December.
Expensive gas
According to analysts, there are several causes for the extremely high electricity prices. First of all, there is the crisis on the gas market. To meet the demand for electricity, the gas-fired power stations are running at full speed. The high gas price therefore has a strong impact on the electricity price. The fact that the demand for electricity from conventional power stations is so high is due to a disappointing supply of electricity from renewable sources. The yield from wind turbines is particularly disappointing for this time of year. In addition, France has shut down a number of nuclear power stations for maintenance. That country is normally a net exporter of electricity, but due to the maintenance work, it has now become an importer of electricity. In a market where there is already limited supply, all production capacity that is temporarily unavailable puts a heavy burden on the market.
Analysts do not expect a major increase in electricity prices in the coming days. Several major consumers are scaling down production in connection with the holidays, which provides some relief to the market. After the holiday period, analysts expect the price to rise again. The work in France will last at least until February and that will keep the market in its grip. The major uncertain factor remains the supply of electricity from wind turbines. A change in the weather (more wind) would have a price-dampening effect.