The gas market currently exudes stability. This is due to low supply in combination with lower demand. Meanwhile, a high percentage of solar energy and a low amount of wind power ensured stable, but high, daily prices.
The price of gas has fallen again after a brief increase. On Tuesday, July 16, the price was €32,78 per megawatt hour. However, on Monday July 22, the price had fallen again to €31,47.
An important reason for the earlier increase is the current events surrounding LNG. Although the Asian price has fallen somewhat from a high of $12,74 per mmBtu, there appears to be some stagnation at levels around $12. Since this level is still on the high side, there appears to be no price pressure on the TTF.
In addition, it does not help that the capacity of the large American upload facility Freeport-LNG is still limited. Production was drastically reduced due to storm Beryl. It was expected that the facility would soon be running at full speed again, but that is disappointing. Since the storm, seven of the ten planned deliveries have been canceled. This lower volume has a particular impact on the European market, as the vast majority of American LNG is shipped to the European Union. In addition, the capacity of European import facilities remains limited, as work on the France Montoire terminal has been postponed until August 5.
Yet the room for an increase is limited. This is mainly due to the high filling level of the gas reserves. According to the latest score, European gas reserves were 82,9% full on Sunday, July 21. This means that not much extra gas is needed to restore the filling level to 100%.
Although filling the reserves is still slower than average, the current speed is sufficient to reach 100%. However, the risk of the low filling rate is not zero. The low filling speed makes the European gas market vulnerable to disruptions. In addition, the low filling rate is a signal that the supply on the European market is lower than in previous years. Although gas demand is clearly structurally lower. Since 2023, Dutch gas demand has been more or less structurally 30% lower than before the war in Ukraine. That trend continues. The main reasons for the lower consumption are lower industrial activities and the growth of the Dutch solar and wind energy capacity.
Electricity prices remain high
The price of electricity is relatively stable, but on the high side. On Tuesday, July 16, the electricity price was at the lowest point of the week. That day the price was €45,10 per megawatt hour. Electricity reached its highest rating on Thursday, July 18. That day the price rose to €89,87. It is remarkable that the electricity price remained on the high side during the weekend. On Sunday, July 21, the price dropped to just €59,61.
The total share of the two virtually free renewable energy sources, solar and wind energy, was lower last week than the previous week. A total of 62,6% solar and wind energy was generated. For this purpose, 66,8% was generated from these sources. As a result, the share of relatively expensive gas-fired power stations increased from 21,6% to 26,2%. This percentage of solar and wind energy is still on the high side, but more importantly, the market this week showed a usual summer pattern that was rarely seen earlier this year. The share of solar energy was significantly higher this week than in previous weeks. In total, 43,9% of all electricity was generated by solar collectors. The amount of wind energy, on the other hand, was 18,7%.
This significantly changes the dynamics of the energy market. Wind energy is generally quite stable and keeps the electricity price down all day long. On the other hand, the power of solar energy increases towards the afternoon and clearly peaks. This ensures that hourly prices are specifically depressed in the middle of the day. This had the effect on the market that prices during the weekend were significantly higher than previous weeks, while prices were negative on Saturday between 11 a.m. and 4 p.m. On Sunday, prices were negative between 1 p.m. and 3 p.m. This indicates an inefficient use of renewable resources, which resulted in prices being on the high side. However, on the other hand, the electricity price during weekdays during business hours was low, as cheap electricity was consistently supplied during most of the working day.