While the gas market is stable, the electricity price is on the high side. In the case of gas, full storages in particular ensure a stable market. Meanwhile, the low wind power provides expensive electricity.
The gas market is currently quite stable. On Tuesday, June 18, gas traded for €34,70 per megawatt hour. A day later, the gas price was at the highest point of the week. On Wednesday, June 19, the gas price rose to €35,34. Then the gas price fell. On Friday, June 21, the price was at the highest point of the week. On that day, gas traded for €33,94.
The gas market remains reasonably stable due to significant inventories. In total, the gas reserves are 74% full. Although the reserves are not being filled very quickly, this is unusually high. In this way, the stocks conceal the fact that the supply of gas is still relatively difficult. Since June 9, the filling rate of gas reserves has grown by only 2 percentage points. That remains atypically slow.
LNG imports decisive
The slow filling process is still partly due to weak exports from Norway. Even more important is the low import of LNG. In recent months, demand from Asia has been significant, as demand for power for cooling in Southeast Asia has been high. Overall, Asian exports fell slightly, but in practice the decline is too small to really help Europe. Forecasts from shipping data agency Kpler show that Asia is likely to import 23,18 million tons of LNG. That is a slight decrease compared to May. Compared to June 2023, imports are still 8,9% higher, compared to 21,28 million tons. This results in a slightly lower LNG price of $12,47 per mmBtu.
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Most countries showed a slight decrease in imports. Yet there is an exception, and that is imports from India. That country broke May's record import of 2,46 million tons and imported 2,72 million tons of LNG. Due to severe heat waves, India needs extra gas to meet the electricity demand for air conditioners. Normally, the share of gas in India's electricity mix is 2%, as coal is responsible for 75% of all electricity in the country. However, in May the share of gas rose to 3,1% and the share is expected to increase further. In addition, LNG is used in India to produce fertilizer. In total, production increased by 7,8%.
New sanctions against Russia
It is remarkable in view of the difficult LNG market that the European Union has presented a sanctions package against Russian LNG imports. Although the package is mainly a symbolic measure, as the LNG used to replenish reserves will not be included on the sanctions list. The sanctions package bans investments in and exports to Russian LNG ports. In addition, the package bans the transit of Russian LNG in European ports.
Gentle wind provides expensive electricity
The electricity price was higher this week than previous weeks. On Tuesday, June 18, electricity traded for €95,54 per megawatt hour. That was the highest point of the week, although the price barely deviated from that for most of the week. Over the weekend the price was just above €50, with a low on Saturday, June 22. That day, electricity traded for €51,62 per megawatt hour.
The higher electricity prices were mainly the result of lower wind power. In total, only 18,7% of all electricity was generated by wind turbines last week. As a result, only 51,9% of all electricity was generated virtually free. Last week, 64,2% of all electricity was generated from renewable sources. As a result of the low revenues from wind energy, the share of gas increased from 28,1% to 36,8%. This caused the price of electricity to increase considerably.
The difference was slightly compensated by the resumption of power production from the nuclear power plant in Borsele. Last week the exchange was switched off for maintenance. This week the plant was active again and 3,5% of the power was generated by nuclear energy.
Investing in energy storage
In addition, research by research agency AgriDirect shows that approximately 10% of dairy farmers are interested in investing in energy storage. More than 75% of dairy farmers already have solar panels or wind turbines. To use electricity more efficiently, about 10% are interested in energy storage. However, the percentage of dairy farmers wanting to invest in solar panels decreased. Last year that was 22,5% of all dairy farmers. This year the percentage dropped to 8,6%.