While the gas price has risen, the electricity price has been quite stable this week. The main reasons for the higher price of gas are lower Norwegian supply and a higher price of LNG. In the meantime, the electricity supply remains
The price of gas is on the rise. On Tuesday, May 14, gas traded for €29,67 per megawatt hour. On Tuesday, May 21, the TTF rose to 31,89 per megawatt hour.
The main reason for the increase in the gas price is planned maintenance at various Norwegian gas fields. For example, the Troll field will deliver 46 million cubic meters less per day next Wednesday. In addition, the supply from the Kollsnes field will decrease by 66 million cubic meters next Thursday. Subsequently, the supply per day will be limited to around 38 million cubic meters until the beginning of June, according to Gassco's planning.
Asian price drives European
Meanwhile, the Asian price of LNG is also driving up the TTF price. Demand is growing due to warmer weather in Asia to gas to provide extra electricity for air conditioning. The main increase comes from eastern China, where temperatures are above average. In addition to China, Vietnam also suffers from heat and demand in India is expected to increase in the summer. As a result, the Asian price of LNG rose from $10,50 to $10,90. In addition to the extra demand, the fact that the TTF is rising along with the LNG price also provides extra momentum. Due to the competition from both markets, there is currently an upward spiral.
That competition is driven by the attempt to replenish European reserves. After a disappointing start, that process is back at full speed. In April, reserves were barely replenished, because temperatures were considerably lower than average. However, in May the filling level picked up significantly again. Last week, European reserves were 62,8% full. At the time of writing (Tuesday, May 21), the filling rate had increased to 68,8%.
Electricity price stable
In the meantime, the electricity price is a lot more stable than last week. On Tuesday, May 14, the EPEX was at the lowest point of the week, at a level of €34,05. On Friday, May 17, the price reached the highest point of the week, at €83,11.
The relative stability on the market is remarkable, as solar energy production was strong while there was no wind. In total, 40,6% of all electricity was generated from solar energy and 17,7% from wind. In general, that is an indicator of instability, as production is not as consistent as wind energy production. This can still be seen at the hourly level, but the price remains relatively the same throughout the day.
In total, 30,9% of all energy was generated by gas-fired power stations. The costs for this increased slightly due to the higher price, causing the basic price of energy to rise. This also caused the prices to be a bit closer together. Moreover, the price of using gas-fired power stations did not only increase due to more expensive gas. A higher price for CO2 rights also made burning gas more expensive. On Wednesday, May 17, European CO2 rights were traded for €70,52 per tonne. On Tuesday, May 21, the CO2 price rose to €74,35. The decline is particularly significant over a longer period. Compared to the low point of the CO2 price on February 19, the price has risen sharply. On that day, the price of CO2 fell to €54,21, 37,05% less than the most recent quotation.
CO2 price significantly lower
Yet the price of CO2 is still nowhere near the peak level of more than a year ago. Due to the invasion of Ukraine, the CO2 price rose sharply to a level of €104,81 in March 2023. The additional demand for coal power in particular drove up the European CO2 price. The fact that prices have now fallen sharply again is partly due to a decrease in the share of coal-fired power stations, as gas has taken over again due to the high filling rates. In addition, the CO2 price was held back by the weak economy. Now that the economy is slowly picking up, the CO2 price is increasing again.