Last week the price of electricity continued to rise. For the first time since the beginning of September, the electricity price has not fallen below €300 at any time in the last seven days. The higher gas price in particular leads to more expensive electricity, but the limited production from renewable sources also keeps the electricity price in its grip. In addition, the government introduced a tax on 'excess profits' of electricity producers.
Over the past seven days, the electricity price was on average higher than the week before. On Monday, November 28, the electricity price was €324,05 per megawatt hour. Until Wednesday, November 30, the price rose to the highest point of the week. The EPEX spot reading at that time was €393,39. Due to lower demand, the electricity price often drops towards the weekend and this week was no different. On Saturday, December 3, the EPEX was at its lowest level of the week. The rate for a megawatt hour of electricity at that time was €306,39. On Monday, December 5, the electricity price rose to €351,26 per megawatt hour.
The main cause of the higher electricity rate is a higher gas price. Because the mild autumn has finally come to an end, the price of gas is on the rise. Until early November, temperatures were much higher than normal. The mercury never rose above ten degrees. Because Dutch people turned off their heating en masse, households used 50% less gas until the end of November. Until two weeks ago, the TTF position fluctuated between €100 and €125. Temperatures have now normalized again and this will not change in the coming weeks. As a result of the colder weather, gas prices have risen slightly. Since last week, the gas price has fluctuated approximately between €125 and €150.
This higher gas price directly leads to more expensive electricity. In the Netherlands, approximately 50% of electricity is usually generated with gas. Due to the low availability of coal, 60,9% of all electricity was generated from gas this week. However, the high filling rates of European gas reserves have prevented an even sharper increase in the gas price. For example, the filling level of Dutch gas reserves is still above the target of 87% at 85%.
Energy from renewable sources is lagging behind
It is not only the high gas price that is causing the rising electricity rate. Last week, a lot less renewable energy was generated. Last week, only 23,5% of energy came from renewable sources. For the rest of this fall, this percentage was almost consistently above 30%.
Solar panels and wind turbines in particular generated less energy. Slowly but surely, the number of hours of sunshine is starting to decrease considerably and the wind force also seems to have passed its autumn peak. Until last week, more than 20% of all energy was generated from solar and wind energy for almost the entire autumn. Last week this percentage fell to 14,6%. This decrease causes a significant increase in the energy price, because these forms of renewable energy, unlike biomass, are generated virtually free.
Additional profit tax
Last week the government introduced the next step in the new energy policy. On Thursday, November 30, Minister of Climate and Energy Rob Jetten introduced a new tax for the 'excess profits' of energy producers. The tax was introduced just one day later. The new tax is aimed at profits on electricity generated from sources other than gas. The proceeds from this new tax will be partly used to finance the support packages. From Friday 1 December, energy companies will pay 90% tax on profits above a ceiling rate that varies per generation method.
The lowest tax-free rate of €130 applies to solar and wind energy. Generating energy from these sources is virtually free. The Netherlands has therefore opted for a lower tax-free portion than the EU has in mind. European law requires that European countries tax profits above €180.
Because the costs for biomass are a lot higher, a price ceiling of €240 applies for this type of energy. A flexible price ceiling applies to coal power. The price of this raw material can vary considerably. Normally the tax-free rate for coal is €130. But to prevent coal-fired power stations from stopping production when coal prices rise, this price will rise in line with price developments on the world market.