Due to the large production of wind energy, electricity prices fell below €100 for most of the week. A low listing on the TTF also leads to a lower electricity price. However, there is also a disadvantage to the growing share of solar and wind energy. Grid operator Tennet warns in a report to the Ministry of Economic Affairs that electricity shortages could arise from 2030 onwards.
Last week the electricity price was relatively low. On Tuesday, January 10, the price on the EPEX was still €130,27 per megawatt hour, but from Wednesday the electricity price fell sharply. Between Wednesday, January 11 and Sunday, January 15, the electricity price did not exceed €100. On Sunday, January 15, the electricity price was at the lowest point of the week, at €78,18. A day later (Monday, January 16), the electricity price reached the highest point of the week. The purchase price for a megawatt hour of electricity at that time was €133,26.
The low electricity price this week is mainly due to the large production of renewable energy. In the Netherlands, no less than 54% of all electricity was generated from renewable sources this week. About 45,1% of the power came from wind and solar energy. Wind turbines even made a record contribution of 41,8% to the Dutch energy mix this week. Due to the high yields of green energy, the share of gas-fired power stations was much lower than average this week. Usually, more than 50% of all Dutch electricity is generated by gas-fired power stations. Last week this percentage was only 30,4%.
In addition, it was relatively cheap to generate electricity from gas this week. Since December, prices on the TTF have more than halved. During that period, the gas price reached €150 per megawatt hour. Last week the gas price was a lot lower. On Monday January 9, the gas price was around €75 and the TTF quotation is now even approaching €50.
The low share of gas in our electricity mix and the low price on the TTF resulted in an average hourly price of only €102,40 per megawatt hour last week. This means that the electricity price appears to have reached its lowest level for the time being. Several analysts predict that electricity prices will rise to around €150 per megawatt hour this week. According to the weather forecasts, the wind will be a lot less strong in the coming days. In addition, temperatures will drop sharply in the coming days, which will increase the demand for electricity.
Moreover, the electricity price at a level of €150 is still low compared to the rates of 2022. Since the start of the Ukraine war, the electricity price has only been structurally lower from October 20 to November 13 and the first two weeks of January 2023. .
Tennet warns of shortages
Although green energy significantly reduces the price of electricity, the Dutch grid operator Tennet warns against the dependence on wind and solar energy. On Thursday, January 12, the grid operator released its annual report on Monitoring Security of Supply. At present, the security of electricity supply is as high in few countries as in the Netherlands. However, this could change from 2030 onwards. The grid operator does not rule out that shortages may arise from that year onwards, which could cause electricity outages in the Netherlands.
This risk is the direct result of the growing share of green energy in our energy mix. Wind turbines and solar panels have been gaining ground in recent years, while the share of fossil energy is shrinking. Although this is an effective way to reduce European CO2 emissions, it is at the expense of so-called controllable capacity. This is electricity that can be generated at any time when it is needed. As a result, European countries are in danger of becoming dependent on the intensity of the sun and wind for their energy supply. Meanwhile, the need for a constant supply of electricity is increasing due to the electrification of European industry, Tennet notes.
Risk can be overcome
It is not yet a given that shortages will actually arise. According to Tennet, the government can take various steps to solve the problem in advance. For example, the government can invest in energy storage in the form of batteries or hydrogen. In addition, increasing the number of power connections abroad could help import more power in the event of an impending shortage.
Building nuclear power stations could also provide more controllable power. Although this is mainly a long-term solution. If construction of a new nuclear power plant were to start tomorrow, the plant would not open until 2035 at the earliest. Moreover, the share of nuclear energy on the European power grid will actually decrease in the coming years. Germany and Belgium are still planning to replace their nuclear power stations with gas-fired power stations and plans for new nuclear power stations in other European countries are still at an early stage.