The price of electricity also rose this week. At the moment everything points to a high electricity price. The production of green electricity is disappointing and at the same time the price of fossil fuels is high. Meanwhile, a low supply of power from French nuclear power plants is putting considerable pressure on the European electricity market.
The price of electricity also rose this week. At the end of October, electricity was still trading at a price of around €100 per megawatt hour. This week, on the other hand, the market rate for electricity exceeded €325 every day.
This week electricity prices were relatively high. Last Monday, December 5, the EPEX spot opened at a price of €351,26. The price then dropped to €339,85 on Wednesday, December 7, before rising sharply again. On Thursday, December 8, the price of electricity rose to €413,73. The electricity price usually drops towards the weekend due to lower demand and this week was no different. On Sunday, November 11, the EPEX spot was at its lowest point, at a quotation of €328,27. The highest price of the week followed on Monday, December 12, when a megawatt hour of electricity cost €427,60.
The fact that the price of electricity is relatively high is partly due to declining yields from green energy. Last week relatively little solar and wind energy was generated. Renewable sources only managed to dampen the electricity price to a moderate extent, but relatively high prices of fossil fuels also drove up the electricity price. This results in a gas price that is about €25 higher than in November. Because 54% of all energy this week was generated from gas, such a price increase has a direct impact on the electricity price.
Electricity from coal is also expensive
In addition, it is currently above average expensive to generate electricity from coal. Coal is much more expensive than normal. Before 2021, coal typically traded for $50 to $100 per ton. Currently the price of the leading Newcaste Coal Futures is hovering around $400. The coal price has already been high throughout 2022. Yet the price of coal has risen remarkably fast compared to last month. Winter weather in particular causes the higher coal price. In many Asian countries, coal is still used to fuel heating systems. In November the price of coal was about €40 to €80 lower.
But it is not only high raw material prices that make electricity production expensive. The trading value of emission allowances has also risen sharply since November. In mid-November, the price per tonne of CO2 was approximately between €72,50 and €77,50. The price for CO2 rights is currently around €90. Because much more CO2 is released when generating electricity in a coal-fired power plant than in, for example, a gas-fired power plant, the CO2 price has a direct major impact on the production costs of coal-fired power.
Offer is disappointing
Throughout the week, the electricity price was higher than the cost of electricity generated by gas-fired power stations. At the moment, the production of a gas power plant costs about €320 per megawatt hour. This is special, because 46% of all electricity is generated from cheaper sources. About 17,1% of all electricity was even generated virtually free by wind turbines and solar collectors.
The price difference between the electricity price and the cost price of gas-fired power stations indicates an imbalance between supply and demand. Electricity production is currently under pressure in many European countries. Lots of French nuclear power plants are down for maintenance. Because France can normally supply extra energy from their nuclear power plants quickly and cheaply, many European countries are prepared to purchase French power when there is a high demand for electricity. However, France is currently a net importer, which means that electricity must be generated in other places in Europe through more expensive means.