Gas and electricity prices have clearly fallen in recent weeks. Higher temperatures in particular lead to lower prices on the energy markets.
Last week's decline continues on the gas market. On Thursday, December 7, the gas price rose to the highest point of the week, to €39,97. On Monday, December 11, the price on the TTF had fallen to €36,24.
The lower gas price is directly related to the milder weather. Last week it was still quite cold for the time of year, so gas demand rose to the average before the invasion of Ukraine. The result was a drop in gas reserves of no less than 5% in just a week. This brings the filling level to 88,5%. This is still 4,5% above the current target of 84% of the Dutch Gas Union. As a result, the sharp drop does not cause the dampening effect of the well-filled gas reserves to disappear. Especially now that it appears that the cold weather is almost over, it seems that we are entering January with a record amount of gas.
Now that the cold period is over, temperatures in Europe are again around the five-year average, with peaks upwards. In Germany the afternoon temperature is between 3 and 8 degrees and in France temperatures regularly exceed 10 degrees. The low expected heating demand puts pressure on gas prices. It is expected to become slightly colder in the coming days, but milder weather appears to be coming again from next weekend.
Finally, the weak Chinese economy dampens prices on the TTF. Due to lower industrial gas demand, the Chinese import price of LNG has fallen significantly in almost every port. According to the lowest available quote on Friday, November 8, LNG was trading at an average of 5.734 yuan per tonne (€749 at the current exchange rate). On Friday, December 1, the Chinese LNG price still recorded an average of 6.556 yuan per tonne (€856,48), a decline of 12,5%. Due to the low Chinese prices, plenty of LNG is entering European ports, despite an even lower price. In Europe, LNG is trading at $11,28 per mmBtu, compared to an average price in Asian markets of $15,50 per mmBtu, according to S&P Global Commodity Insights.
Electricity prices are also falling
The price of electricity also fell almost constantly last week. The top price of the EPEX was €126,60 on Wednesday, December 6, more than €40 lower than the top of the previous week. On Sunday, December 10, the price dropped to €55,45. The electricity market opened on Monday at a low level of €79,04 for a Monday. The lower gas price in particular is currently putting pressure on the price of electricity.
The wind power helped reduce the price of electricity somewhat. Two weeks ago, 14,9% of all electricity was generated by wind turbines. With 5,2% of solar power on top of that, the percentage of 'free' energy amounts to 20,1%. Previous work increased the percentage of wind energy to 27,7% and the total percentage of renewable energy to 31,1%. As a result of higher production, the share of gas in the energy mix fell from 50,9% to 41,2%.
Especially at daily level, the additional revenue from renewable sources resulted in lower prices. During the weekend, considerably more electricity was generated during the day than the rest of the week. The yields from wind turbines in particular were considerably higher. On Saturday, the power from wind energy did not fall below 5,61 gigawatts, according to data from Energieopwek. On Sunday the bottom was even 6,6 gigawatts. Meanwhile, the peaks reached 8,69 gigawatts on Saturday and 8,15 gigawatts on Sunday. On Wednesday, wind turbine production fell to 121 megawatts by comparison, while the highest production that day was 2,76 gigawatts.