The electricity price was quite high last week. The upward price pressure is the result of lower revenues from renewable energy and an upward correction in the gas market. Meanwhile, contradictory developments in the field of offshore wind energy are causing concern.
The electricity price remained quite high last week. On Tuesday, July 18, the electricity price was at its highest point of the week, at €97,60 per megawatt hour. The electricity price remained very stable until Friday, July 21. The lowest level was on Thursday, July 20, at €94,36. The price fell over the weekend and the market bottomed on Sunday. On that day, electricity traded for €30,44 per megawatt hour.
Lower production from renewable sources, among other things, drives the electricity price up. Only 53% of Dutch electricity was generated from fossil sources. About 47,9% of this was generated from the free sources of sun and wind. For most of the summer this percentage was above 60% and more than 55% of all electricity was generated virtually free. The gray weather in particular leaves its mark on the electricity market, because lower yields from solar collectors in particular mean less free electricity. In large parts of Europe, yields from renewable energy are lower. While the almost autumnal weather in the Netherlands sometimes brings a lot of wind, the wind is less strong in large parts of Europe.
In addition, an upward correction in the gas market also causes higher electricity prices. On Monday, July 17, gas traded for around €25 per megawatt hour. On Monday, July 24, the TTF quotation rose to around €30. According to analysts, the price increase is the result of higher electricity costs. While yields from renewable sources are declining in most of Europe, extreme heat continues in southern Europe. As a result, the demand for air conditioning remains high, while much less free energy is available.
There is trouble in the wind sector
In the meantime, developments in the field of offshore wind are occurring rapidly. Last week, Vattenfall announced that it would stop realizing an offshore wind farm near Norfolk with a capacity of 1,4 gigawatts. The Swedish state-owned company decided to pull the plug on the project after it turned out that the costs turned out to be 40% higher.
Yet the market appears to have far from lost confidence in wind energy. Two weeks ago, BP and Total decided to invest €12,6 billion in offshore wind energy in Germany. The expectation is that an average of around 7 gigawatts will become available from 2030. It is remarkable that companies are getting involved without any subsidies. In previous German wind energy projects, substantial subsidies were a condition for companies to participate. Germany plans to expand its offshore wind energy capacity to 2030 gigawatts by 30. At the end of 2022, that capacity was only 8,2 gigawatts.