Broken week puts pressure on electricity prices

The gas price has fallen this week. On Wednesday, May 7, gas traded for €31,07 per megawatt hour. After that, the gas price fell almost constantly, to €29,77 per megawatt hour.

Although the European gas price has fallen, the price is about 33% higher than a month ago. Now that the filling season has started, traders are looking ahead again and the fear of a cold winter is slowly but surely starting to fade away. That caused quite a bit of volatility in the market. The cold month of April did not help. The high level at the beginning of this month was mainly the result of low temperatures, which made the heating season last slightly longer than normal. As a result, filling the gas reserves was slower than usual.

At the beginning of April, the filling level broke record after record, but at the end of April the reserves were at the 2020 level. Now that temperatures are back around the average for the time of year, the price is dropping. The high starting point of the gas reserves helps in this regard. The reserves are now increasing again at a rapid pace. The current filling rate in the European Union is 62,8%. The market expects that the reserves will again be 100% filled this year, it said ING.

Uncertainty remains
However, there is certainly no guarantee that the price will continue to fall. Thus, Chinese demand for LNG continues to rise. As a result, the Asian LNG price has risen from $10,40 to $10,50. The expectation is that the price will continue to rise. Although the increase remains relatively limited, as Japan and South Korea ignore the spot market and gas stored in the terminals is traded. In addition, there is more good news for Europe. Various media have reported that processing capacity in the United States is increasing. Due to problems at the large LNG facility

In addition, several contracts for the supply of Russian gas to the European Union via Ukraine expire at the end of 2024. About 15 more BCM are imported via the pipeline. It is highly conceivable that the volume will disappear. ING expects that Europe will still be able to obtain enough gas to fill the reserves if this happens. Although the bank does expect prices to rise in such a situation.

Electricity prices vary considerably
Meanwhile, electricity prices varied considerably this week. On Wednesday, May 8, the EPEX reached its highest point of the week, trading at €91,86. Prices were considerably lower for the rest of the week, with a low point on Sunday, May 12. That day, electricity traded for €7,79.

The electricity price was on the low side this week. It is notable that renewable energy sources made a relatively low contribution over the entire week. In total, only 49,2% of all electricity was generated by renewable sources. In recent weeks the percentage has been around 70%.

The summer weather still left its mark on the market. In total, 39,5% of all energy was generated by solar panels. In the meantime, weak wind power provided little consistent pressure on electricity prices. The percentage of wind energy amounted to 9,7%. As a result, the coal-fired power stations had to work hard and 39,3% of the electricity was generated by gas-fired power stations. On Wednesday, May 8 in particular, the high gas demand resulted in expensive electricity, as slightly less solar energy was generated that day than the rest of the week. Monday, May 12, opened the week due to the significant production of solar panels with a more attractive rate.

Ascension
The fact that prices remain relatively low is due to lower demand. Due to the May holidays, a lot of people were still on holiday last week. In addition, Ascension Day fell on Thursday, May 9, which caused the price to drop considerably. On that day, industry was largely at a standstill, causing demand to drop significantly. There was a slight recovery on Friday, May 10, but demand remained on the low side. Many employees choose to take an extra day of vacation that day.