For a while, the gas price seemed to rise due to greater demand from Asia, but the increase has now largely been offset by a large global LNG supply. Meanwhile, the electricity price came out of its holiday mode and rose back to pre-holiday levels.
For a while, the gas price seemed to rise due to greater demand from Asia, but most of the increase has now been offset by a large global LNG supply. Meanwhile, the electricity price came out of holiday mode and rose back to pre-holiday levels.
The gas price was fairly volatile this week. On Tuesday, January 2, the TTF stood at €30,57. The gas price then rose to €5 until Friday, January 34,55. On Monday, January 8, the gas price was significantly lower. On that day, gas traded for €31,80.
For a while, the gas price seemed to rise due to greater LNG demand from the Asian market. Asian imports increased to 26,61 million tonnes in December. Demand from China in particular is pushing imports up sharply. Imports rose from 6,97 million tonnes in November to 8,22 million tonnes in December. The increased imports from China is exactly the scenario that the International Energy Agency, among others, has been warning about since the beginning of the Ukraine war. Due to Europe's greater dependence on LNG, greater demand from Asia could lead to significant price increases, according to the organization. The gas price quickly corrected downwards again. However, due to a significantly higher supply, prices are still at a low level.
LNG exports from the United States in particular grew strongly, which is good news for Europe. Although there was a shift towards the Asian market, the United States exported the vast majority of its gas to the European market. In December, the United States exported a whopping 61% of its LNG to Europe, or 5,43 million tons. Despite higher Asian prices, exports to the largest competitor, the Asian market, remained at 26,6% or 2,29 million tons. Due to higher European demand, United States exports increased by 14,7% compared to 2022. As a result, the United States has grown into the largest LNG exporter in the world. Last year, Australia and Qatar exported even more LNG than the United States.
In addition, favorable weather also resulted in lower gas prices last week. The fact that the weather was still on the mild side last week is reflected in the status of the gas reserves. The filling level decreased by only 2% to 80%. This is the result of a 35% drop in demand compared to the pre-war period in Ukraine. This means that the difference between the targets of the Dutch Gas Union and the filling level increases from 5 to 6 percentage points.
Electricity market back from holiday
The electricity market came out of holiday mode a bit last week, but was still relatively low. On Wednesday January 3, electricity was the cheapest at €51,43. The price then rose to €99,59 on Monday, January 8.
The price increase is due to increased industrial demand as more and more people returned from their Christmas holidays. Compared to the period before the Christmas holidays, the electricity price was still relatively low. However, on Monday the quote was back around €100 per megawatt hour, a level that fits with the high returns from renewable sources that we saw last week. Once again, the strong wind force in particular resulted in a lower electricity price. As much as 45,6% of Dutch electricity was generated by wind turbines. Add 3% of solar power on top of that and you get 48,6% of virtually free energy. In total, the share of gas in the electricity demand was 35,9%.
Now that 2023 is over, it is a good time to take stock of renewable energy. A significant increase in the share of renewable electricity can be seen. In total, 50% of Dutch electricity is generated from renewable sources. Of the total energy consumption (which also includes, for example, industry and transport and heating of homes), 17% was renewable. It is important that biomass is also included in the figures, says Martien Visser of the Dutch Gas Union on X (formerly Twitter).