Due to falling prices of fossil fuels and favorable returns from renewable sources, the electricity price remains low. However, there is clearly still tension in the market. A short dip in the production of green energy caused a clear peak in the electricity price.
In general, EPEX-Spot prices were below last week's levels. On November 1, the price was at the lowest point of the week at €70,42. This is the lowest electricity price since May 28. The low prices on the electricity market were briefly broken by a small peak between November 3 and 5. Because less green energy was produced during this period, the electricity price reached €178,79. After the weekend, the electricity price fell below last week's level again and fluctuated around €90.
One of the main causes for the lower prices on the EPEX Spot is the low gas price. About half of all Dutch electricity is generated in gas-fired power stations. The gas price is lagging behind considerably compared to the summer. Prices on the TTF are currently fluctuating between €100 and €125. The low gas price is, among other things, the result of the successful purchase of LNG and well-stocked gas reserves.
But the above-average temperatures in particular put pressure on prices on the TTF. All autumn, the summer-like temperatures have ensured that the heating systems in the Netherlands are barely on. This reduces gas demand by about 30%. The fact that the mercury drops slightly again does not seem to have a major influence on the electricity price. Because the temperature remains high for this time of year, gas demand was again about 34% lower than average last week.
The price of coal is finally falling
The falling coal price is also putting some pressure on electricity prices. For the first time since early May, the coal price has fallen substantially and for a long time. The price of the leading Newcastle Coal Futures was structurally around $400 per tonne this summer. Prices have been falling since October, but things have been going fast since last week. On October 28, a ton of coal still cost $385,70, but at the time of writing (November 8) the price has dropped to $345.
However, the effect of this decline remains limited. Hardly any energy has been generated from coal all autumn. Due to the relatively low price of gas, coal power is often more expensive than the electricity generated by gas-fired power stations. Although the price of coal is falling quite quickly, it is still not profitable to generate large amounts of electricity from coal. This week the coal-fired power stations were used at 25%. This means that the use of coal-fired power stations will remain limited compared to the rest of 2022. When gas prices were at record highs this summer, coal-fired power stations were regularly used at 50% to 70%.
Renewable energy appears to be decisive.
Cheap fossil fuels were not the only cause of the low energy price. As in previous weeks, the high production of electricity from renewable sources also contributed to a lower electricity price. This week, the share of renewable sources in the Dutch energy mix rose to 37,5%. The share of solar energy declined slightly last week, but was more than compensated by additional revenues from wind energy. The production of renewable energy turned out to be a major determining factor for the electricity price. On Friday, November 4, the production of renewable energy decreased somewhat. This immediately resulted in a significant price spike. On that day the electricity price was almost twice as high as the rest of the week.