Gas and electricity prices were fairly unstable this week. While gas prices rose due to higher summer temperature forecasts, strong production from renewable sources failed to tame electricity prices.
The gas price is currently far from stable. On Tuesday, May 28, gas traded for €33,83 per megawatt hour. After that the price fluctuated considerably. On Monday, June 3, the gas price rose to €36,06.
Just under a month ago, low temperatures still resulted in high gas prices, as the heating systems were left on until late in the year. The situation has now reversed and an expected heat wave is causing higher gas prices. Various meteorological institutes predict that this summer in the south of Europe will be characterized by significant heat waves.
Warm weather is expected, especially in France and Spain. In addition, temperatures of above 30 degrees are also expected in Eastern Europe in mid-June. Later in the summer, the temperature in Northern Europe also rises sharply, according to the long-term forecasts of various meteorological institutes. The market expects that gas demand will increase as a result of greater use of air conditioning.
LNG price also responds to heat
High prices still set the tone in Asia as well. Due to various heat waves, the Asian spot price for LNG is currently on the high side. India in particular is purchasing significant additional LNG on the spot market, as electricity demand has risen sharply. Temperature records of 52,9 degrees Celsius are being set in the country's capital. In addition, South Korea and Japan are already purchasing LNG for early June/end of July, as higher temperatures are expected during that period.
Despite the hot weather, prices have fallen slightly from $12 per British thermal unit (mmBtu) to 12 per mmBtu. Yet the price is still at the second highest point in six months. The decline is therefore mainly a correction to a very high price. This high LNG price also drives up the TTF, as there is still extra liquid gas to fill the reserves to around 100% at the end of the summer.
Renewable sources do not depress electricity prices
Meanwhile, the electricity price remains on the high side. On Tuesday, May 28, electricity traded for €82,29 per megawatt hour. On weekdays the price fluctuated somewhat, but on weekends the price fell. On Sunday, June 2, the price decreased to €8,17. However, on Monday June 3, the price rose again to €102,29.
It is remarkable that the high gas price hardly played a role in the high electricity prices. Although the higher gas price ensures higher basic consumption, the utilization of the gas power plant of 22,7% was quite limited. Strong production of both solar and wind energy together ensured low gas consumption. In total, 30,7% of all Dutch electricity was generated by solar panels and the total share of wind energy was 33,2%. In total, 63,9% of all electricity was generated from virtually free sources.
The high prices are the result of the efficient use of electricity from renewable sources, which means that negative prices rarely occurred. This is partly due to strong exports. Particularly during the night from Saturday to Sunday, the Netherlands exported a significant amount of the extra electricity generated from wind energy. Although exports that day appeared to be less able to keep the price at the same level than the days before. A lot of electricity was also exported on Thursday and Friday. On those days, exports ensured that the large production of renewable energy barely kept prices down.