While the price of gas is falling, the price of electricity is slightly higher. Despite several negative signals, the high filling rate of gas reserves ensures lower prices. Meanwhile, large differences in productivity from renewable sources cause instability in the electricity market.
After three weeks of increases, the gas price fell this week. On Tuesday, March 5, gas traded for €27,47 per megawatt hour. Thereafter, the TTF fell consistently until Monday, March 11. On that day, gas traded for €25,34.
An important reason for the higher gas price was that lower temperatures were expected at the beginning of last week. February was particularly mild with an average temperature of 3,3 degrees above the average between 1991 and 2020. The market expected the heating season to be coming to an end.
However, expectations for March turned out to be less promising. On average, temperatures seemed to be 2 degrees lower on average. In addition, the gas price found support in lower American production figures. To push the low gas price up again, American companies in the energy sector have chosen to pump significantly less gas. This could translate into lower LNG exports to Europe. The impact of this cannot be underestimated as the United States exports two-thirds of its gas to Europe. In addition, the upload capacity of the large American LNG port Freeport remains lower.
However, due to the high filling rates, the gas price did not hold up. According to analysts, the well-stocked gas reserves cushion the effects of weaker supply and slightly higher demand. The European gas reserve is currently 61,6% full and the crucial German filling level is 68%.
Electricity price unstable
The electricity price was a lot more volatile last week. On Wednesday, March 6, the electricity price was at the highest point of the month, at €82,58 per megawatt hour. The lowest price of the week reached the EPEX on Sunday, March 10. On that day the basic price of electricity was €36,46.
The large differences in electricity prices can be directly traced to large differences in the production of solar and wind energy. Production was significantly higher towards the weekend. Between Thursday and Sunday, the production of renewable energy, especially solar energy, was significantly higher than the rest of the week. On Wednesday a fair amount of solar energy was still generated, but on Tuesday 5 and Monday 11 March the production from the two renewable sources was virtually nil. As a result, the percentage of solar and wind energy was on the low side last week. In total, 20,6% of all electricity was generated by wind turbines and 17,1% of all electricity by solar panels. Together this amounts to 37,7% of virtually free electricity.
Renewable energy production
In addition, CBS has published the production figures for 2023. This shows that production from renewable sources has increased significantly. In total, 48% of all electricity was generated from renewable sources. This also includes biomass. The productivity of solar panels increased by 2023% in 25. On the other hand, the production of energy from biomass decreased by 16,7%. On average, 38% of all electricity was generated by gas-fired power stations and coal was the raw material for 4% of the electricity.
This led to record levels of electricity exports. In 2023, the Netherlands exported 25 billion kilowatt hours of electricity, an increase of 10% compared to 2022. Of this, 10 billion kilowatt hours will be exported to Germany. 8 billion kilowatt hours are destined for Belgium and 4 billion kilowatt hours are exported to the United Kingdom. Exports to our eastern neighbors increased by 13%, while the United Kingdom purchased 18% more electricity from the Netherlands.
Industrial production reduces consumption
In addition, Dutch electricity demand remains permanently lower, according to data from the Dutch Gas Union. Since the war in Ukraine, demand for energy has fallen sharply as the industry has adjusted production targets downwards. In 2023, electricity demand was between 4% and 8% lower than the average of 2017 and 2021. There is no clear trend in consumption. For example, consumption in January was 8% lower and consumption in April was down 4%. In December, consumption was again 6% lower than the five-year average before the war.