The price of gas fell sharply this week, while electricity remained on the expensive side. Gas prices fell after it became known that a serious disruption to a Norwegian-British pipeline had been quickly resolved. In addition, no less than a fifth of all solar and wind energy generated was lost due to disconnection of the power grid.
The gas price took a significant step downwards last week. On Monday, June 3, gas traded for €36,02. After that, the gas price fell almost constantly to €32,69.
The price of gas fell after a disruption to the Norwegian supply to Great Britain was resolved relatively quickly. This created an upward spiral as prices on the Asian LNG market also increased. These higher prices also pushed up the cost of LNG for European countries, giving the price even more momentum.
Although the situation is now stable, the strong reaction from the market will not have helped. It shows how strongly the European Union is still dependent on the Norwegian market and how relatively minor incidents can derail the market. The last available data on the share of Norwegian gas in European imports dates from 2022 and is 26%. Although data for 2023 are not (yet) known, dependence has continued to grow.
Supply remains suboptimal
However, not all problems with the Norwegian gas network have yet been resolved. Over the weekend, Norwegian gas company Equinor reported several minor disruptions to the Visund field. As a result, the extra gas yield is somewhat disappointing. The total volume that Norway exported to the EU and Great Britain increased from 256 million to 264 million cubic meters, an increase of 8 million cubic meters. This is quite a low volume, considering that 22 million cubic meters became available after the pipeline to Great Britain was resolved. In total, Norway should export about 300 million cubic meters of gas to the European market.
Share of renewable energy in practice 20% lower
Meanwhile, the electricity price shows roughly the same pattern as last week, although the ups and downs are avoided. The price was generally on the high side. On Tuesday, June 5, electricity traded for €73,25 per megawatt hour. During the week the price remained high, but during the weekend the price dropped considerably, to €24,93 on Sunday. On Monday, June 10, the electricity price reached the highest level of the week, at €90,73.
In general, revenues from renewable sources declined. This is mainly due to lower wind force. The solar power capacity was 36,9% higher than last week. In contrast, only 22,9% of the electricity was generated by wind turbines. In total, the percentage of renewable electricity was 59,8%.
This percentage seems quite high, but in practice it is quite treacherous. Renewable energy generation was quite uneven this week, meaning the amount of power generated was greater on paper than in practice. This is mainly due to very significant peaks in solar energy generation, while wind energy barely provided a bottom. Unfortunately, the wind was especially strong at the times when the sun's strength reached its peak. The consequence of this situation was significant shutdowns and a significant loss of efficiency. Due to disconnection, the percentage of 'free' renewable electricity is about 10 percentage points or 20% lower, as can be read on the X channel of Martien Visser of the Dutch Gasunie. This explains why prices remained on the high side despite the paper's high share of renewable energy.