The energy markets are currently mainly dominated by geopolitical tensions. As a result, the gas price remains significantly higher than in the rest of 2024 and the electricity price also reached its highest level this year. A relatively low share of wind energy also did not help.
The price of gas is stable again after last week's significant increase. On Wednesday, August 13, gas traded for the lowest amount of the week, €38,88 per megawatt hour. On Monday, August 19, the TTF reached its highest level of the week, at €39,83.
The gas price may have stabilized, but the level is clearly higher than the rest of the year. Even if you take the low of €14 from the week of August 38,88, the gas price has not been this high since December 2023. Concerns about the Ukrainian invasion of Russia continue to fuel the high gas price. Heavy fighting at the last Russian pipeline that still transports gas to Europe raised fears of damage to the pipeline. In addition, the seizure of the area around Sudzha measuring station by Ukraine was an uncertain factor that drove up the price.
High level stabilization
The stabilization of the gas price followed now that the worst fear has passed. Due to the well-stocked gas reserves, there is no acute risk of shortages. European gas reserves are currently 90,1% full. This raises the question of to what extent the reserves will be fully filled. The concerns are not so much for the coming winter, but for the winters after. The slow pace of filling the gas reserves does not help. Since the filling process is still slower than average, the EU cannot yet relax, unlike last year.
It does not help that the LNG market is still unfavorable for Europe. The heat continues to grip the liquid gas market, while geopolitical tension between Israel and Hamas poses risks to deliveries from Qatar. This has led to a significant increase in spot prices for Asian LNG. The leading Japanese-Korean benchmark reached a level of $14,47 on Monday, November 19. This is the highest point since December.
Electricity price rises with gas price
The higher gas price clearly also pushes the electricity price to a higher level. Last week, the Epex reached a level above €100 no less than three times. Such a high price has not occurred since June 3. On Wednesday, August 14, the market reached a price of €107,65, the highest level since December 11. In addition, electricity did not fall below the price of €72,78. The lowest quotation of the week was the last time at such a high level at the end of November 2023.
The high electricity price is partly due to relatively low yields from renewable sources. The share of sun and wind was 54,15% lower than was usual this summer. The share of wind energy in particular was on the low side at 14% compared to the rest of this summer.
However, the high gas price in particular drives up the price of electricity. This is also evident from the relatively low share of gas-fired power stations, compared to generation from renewable sources. The market was clearly looking for alternatives this week. This is how the coal-fired power stations were switched on. In total, this generated 2,1% of all electricity. In addition, the share of biomass at 6,2% was approximately twice as high as usual. Despite all these measures to reduce prices, the price of electricity reached its highest level in 2024 due to the high gas price.