The price of gas has fallen due to milder weather. This had a clear impact on the electricity price. Despite the structurally lower production from renewable sources as a result of the onset of winter, the electricity price has fallen.
The gas price also fell slightly again this week. On Wednesday, December 13, the TTF was at its highest point of the week, at €35,81 per megawatt hour. On Thursday, November 15, the price dropped significantly to €33,19. The price of gas is now on the rise again.
On Friday, December 15, the gas price was at its lowest point since mid-September. Milder weather is an important reason for the low gas price. Due to cold weather, gas prices were temporarily around €50 per megawatt hour. The high price was accompanied by a gas demand that was approximately equal to the demand before the war in Ukraine. However, temperatures across the continent are now slightly above the five-year average, which means that consumption has also fallen back to last year's level, namely about 30% lower than a week ago.
The lower consumption clearly has an impact on the gas reserves. Last week the filling rate fell by only 4%, compared to a drop of 5% last week. As a result of this development, the filling level currently stands at 85%. That is still 3 percentage points above the ambitious target of 82% of the Dutch Gas Union. Partly because of those well-stocked reserves, traders seem to agree that reserves are full enough to get through even a harsh winter.
The low Asian LNG prices also help. Weak industrial performance has more impact on Chinese gas prices than the low temperatures currently plaguing the country. The result is an Asian LNG price of €12,70 per mmBtu. That is a decrease of 18% compared to the position at the beginning of December. During that period, LNG was still trading at $15,50 per mmBtu. The February contract is even still at $11,90. The European LNG price is even a lot lower. The European LNG January contract is currently trading at $10,56.
Low gas price
The electricity price was relatively low last week and followed a fairly traditional trend. On Tuesday, December 12, the electricity price was at the highest point of the week, at €102,80 megawatt hours. Until Friday, December 15, the price fluctuated between €90 and €100. Over the weekend the price fell sharply to €54,06 on Sunday, December 17.
The lower gas price once again proved to be an important factor for the lower electricity price last week. The share of energy from renewable sources was, just like last week, quite disappointing. In total, 29,1% of the electricity was generated by wind turbines. Meanwhile, solar panels were responsible for 3,2% of electricity. In total, the share of more or less 'free' energy amounts to 32,3%. We seem to be gradually getting back into the winter pattern. In that phase, both the yields from wind turbines and solar panels are lower. In November, solar and wind energy still accounted for around 50% of electricity demand. The result of the low yields from renewable sources is that 40,2% of all electricity was generated by gas-fired power stations.
To save gas, coal-fired power stations were used extensively. In total, 11,1% of all electricity was generated by coal-fired power stations. Due to high demand from Japan and South Korea, the price of coal has risen sharply. In early November, New Castle Coal was still trading below $120 per ton. However, currently the price of coal is 23,7% higher, at $145,25. However, the lowest price for CO2 rights since October 2022 makes coal burning profitable. CO2 rights are currently traded for €71,55 per tonne. In March that was still above €100.