After the price drop last week, we see a revival in the gas price this week. The extra demand plays a role in this, but Donald Trump's election victory has also caused more fluctuations in the energy market. The electricity price reached the highest level since the beginning of last year.
The dip in gas prices last week has been completely undone. On Tuesday 4 November, gas was trading at €40,30 per megawatt hour. After that, the gas price rose steadily. On Monday 11 November, the price rose to €43,40.
The main reason for the high prices is the low temperature. In recent weeks, Northern Europe has been colder than usual for this time of year. Last week, 8% more gas was consumed in the European Union as a result. The expectation is that it will be a little less cold next week. Temperatures will be around the averages for this time of year.
Trump's victory
Meanwhile, the outcome of the American elections is reinforcing this effect. The gas market is trying to get a grip on Trump's victory. The effects are still very unclear, but according to market analysts, the sentiments about what awaits us are already causing extra volatility. The market is speculating about the possible effects of trade wars. According to analysts at ING, it is likely that any trade wars will cause global energy prices to rise.
In addition, the discussion about the effects on LNG imports is causing extra volatility on the gas markets. Incidentally, a Trump presidency does not have to be negative in this area. For example, ING writes that with the American production of oil, the production of gas will also increase. This will ensure extra supply on the LNG market. In the long term, the effect will be even stronger, as it is expected that Trump will reverse Joe Biden's ban on new LNG ports. In addition, it is quite likely that there will be less LNG export to China. This will also benefit the European market.
For the time being, there is no relief on the liquid gas market. The price of LNG remains roughly the same this week at around €13,50. The expectation is that this price will not fall for the time being. If the winter does not turn out to be very mild, in contrast to previous years, both the countries in Europe and Asia will claim LNG, which will keep the price high. This clearly has an impact on the European gas price, since approximately one third of European gas now comes from the LNG market.
Electricity price peaks sharply
The price of electricity was again quite high last week, with a significant peak. Last week the electricity price was constantly above €100 per megawatt hour. On Wednesday 6 November there was a significant peak. That day the EPEX reached the level of €181,37.
This brought the electricity price to its highest point since January 2023. The situation was roughly the same as in the past two weeks. Renewable energy production is weak, as the wind in particular is lacking. However, the situation turned out to be more extreme than in previous weeks. The total share of solar and wind energy this week was only 13,8%. For most of the year, this percentage was around 50% by comparison. Total generation by solar panels was 8,2%. Meanwhile, wind energy production was 5,6%.
As a result, many additional fossil sources were tapped for electricity production. In total, 57,4% of all electricity was generated by gas-fired power stations. The share of coal-fired power stations was 13,4%. Finally, 8% of all electricity was generated by means of biomass. This resulted in both a high electricity and gas price. Market analysts write that the weak production of wind turbines has had such a strong impact on gas demand that it was a clear factor in the increase on the TTF.