Gas and electricity prices quite unstable

While weak supply and demand cause fluctuations in the gas market, prices in the electricity market vary more widely because more solar and less wind energy is being generated.

The gas price fluctuated considerably this week. On Tuesday, March 19, the trading rate for gas was €28,87 per megawatt hour. Until Thursday, March 21, the gas price fell sharply to €26,40. But now the gas price is almost back to where it was last Tuesday. On Monday, March 25, gas traded for €28,34.

At the end of last week, the gas price had dropped considerably compared to the beginning of the week. The old saying 'March moves its tail' proves to be appropriate once again. It has been relatively cold in recent weeks. While winter and the beginning of the first spring month were particularly warm, the last few weeks were on the cool side. As a result, gas demand remains on the high side for this time of year, resulting in a higher gas price.

Meanwhile, European temperatures are about to turn again. Temperatures are expected to rise again in April. The expectations for that period are again about 5 degrees above the seasonal norm. With milder weather in prospect, the market seemed ready for a clear drop in gas prices. In addition, the change in weather puts an end to the heating season. Traders expect that European gas reserves can be filled again from May. The expectation is that the pain behind this will not be too bad, as European reserves are approximately 59% full.

Freeport LNG throws a spanner in the works
Since Thursday, March 21, the gas price has been on the rise again. The increase in the gas price was fueled from Thursday by new problems surrounding the upload system at the American LNG facility Freeport LNG. At the end of winter, one of the facilities was already damaged. That disruption has now been resolved, but two other facilities are operating at reduced capacity. Experts expect supplies to remain lower until at least May. 

Electricity price unstable
The electricity price dropped considerably towards the weekend, but remains broadly stable. The price was highest on Thursday, March 21, at €89,54 per megawatt hour. Prices drop significantly during the weekend, to €23,97 on Sunday, March 24. On Monday, March 25, the electricity price was at a level of €80,40.   

Compared to February, the effects of higher gas prices are clearly visible in March. This is especially visible on days when little renewable energy is generated. In February, the price of electricity on such days was between €65 and €75. In March, the market reached levels of around $80 to around $90 on similar days.

imbalance
In addition, it is clear that solar energy is taking over from wind energy in the production of renewable energy. The enormous differences in electricity prices are mainly related to the production of renewable energy. Over the weekend, wind and solar energy came together and a lot of electricity was generated. The result is that production from renewable sources shows clearer peaks again.

Power generation data shows that production on Sunday between 7 a.m. and 11 p.m. was consistently between 7,99 gigawatts and 17,18 gigawatts. Later in the evening, production fell to 3,8 gigawatts. Between 9 a.m. and 4 p.m. this resulted in electricity prices of €0. On Saturday production was also strong, but less stable. On that day, as of 7 a.m., production was between 6,16 gigawatts and 21,08 gigawatts. The result was one hour with free electricity and six hours with a negative price.

This clearly has an effect on the market, given that production remained fairly average throughout the week. In total, 40,5% was generated from virtually free sources. Of this, 17% of the electricity was generated by solar panels. Wind accounted for 23,5% of Dutch demand. In addition, consumption during the weekend is lower than during the week, as industrial consumption is lower.