The price of gas is currently on the high side. There are problems on the Norwegian gas market and the LNG price is high. Together with the low productivity of renewable energy sources, this also causes a high electricity price.
The gas price has taken a big step up and remains well above €40. On Tuesday 20 October, gas was traded for €40,70. Until Friday 25 October, the market was on the rise. At the peak of the market, gas was traded for €43,51. Earlier that day, the gas price was even higher. On Friday 25 October, the TTF even briefly reached €43,68. That is the highest level since December 2023.
Analysts say the European gas market is on the nervous side. A major cause of this is a disruption in the Norwegian gas network. After a smoke detector went off in one of the gas facilities, the Norwegian state gas company Equinor decided to switch off the facility. As a result, exports are falling, the company announced. As a result, less gas is available, but only the spot market is affected. According to Equinor, the delivery of gas that has already been contracted can continue.
LNG price still rising
A higher LNG price also drives up the gas price. The competition between the Asian and European LNG markets is clearly becoming stronger. The gas price was already at a fairly high level of around $12 in the summer after several Asian heat waves. The price is now creeping towards $14. On Monday 21 October, LNG was still trading on the leading Asian market for $13,34 per MMBTu. On Friday 25 October, the price of liquid gas had already risen to $13,80.
Finally, the full reserves did not make a difference. The gas reserves are still filled for more than 95%, although gas is slowly but surely being withdrawn from the reserves. This was already the case last week on average in Europe, while historically in this period of the year the reserves are still slightly filled.
Electricity price barely fell
Meanwhile, the electricity price was simply high compared to the rest of the year. This week, the price of electricity was only below €100 for one day. That was on Thursday, October 24. On all other days, the price of electricity was significantly higher. On Friday, October 25, the EPEX reached its highest point and at one point electricity was traded for €108,72 per megawatt hour.
The higher prices this week have one clear identifiable cause. Considerably less renewable energy was generated than we were used to the rest of the year. It was quite windless, but now that the days are getting shorter, that does not necessarily mean that a lot of solar energy is being generated. Although a share of 14,1% of solar energy is considerable for the time of year, the total generation from renewable sources is lagging far behind. In total, 31,2% of the electricity was generated by sun and wind. This is mainly due to low yields from wind turbines, which generated a total of 17,1% of all electricity.
As a result, a lot of electricity was required from fossil sources. In total, 40,9% of all electricity was generated by gas-fired power stations. Of course, it doesn't help that the gas price is quite high. As a result, gas that is not traded under a fixed contract was quite expensive. On top of that, 12% of the electricity was generated by coal-fired power stations and 8,1% of the electricity by biomass power stations.