European gas prices have risen again this week. Cold winter weather and low wind turbine output have caused gas supplies to shrink almost twice as fast as normal. At the same time, limited renewable energy production is driving electricity prices up again.
The TTF also rose further this week. On Tuesday 12 November, gas was traded for €44,26 per megawatt hour, but on Friday 15 November the price rose to €46,52, the highest point of the year. The price has since fallen again somewhat.
Temperatures of a few degrees are expected in Northern Europe until the end of November. As a result, the demand for gas for heating is increasing considerably compared to the previous weeks. On average, about twice as much gas is now being extracted as is usual at this time of year. This is clearly having an impact on the gas reserves. Two weeks ago, the reserves were still 94,5% full. In the meantime, the filling level has dropped by 3,5 percentage points to 91%. On average, the filling of the gas reserves during this period is dropping by about 1,5 percentage points.
In addition, the expiration of the last gas deals with Russia is causing tension on the gas market. On 1 January 2025, the last contracts for the gas supply from Russia to Europe will expire. For the time being, it is very unlikely that the deal will be renewed. Now that the Nord Stream pipeline has been broken for more than two years, all Russian gas is transported through Ukraine. The war-torn country refuses to conclude new contracts with Russia after the deal expires. For the time being, there is no green light for a deal with Azerbaijan. That deal must eventually replace the Russian gas and can be concluded at any time. For the time being, however, the deal has not yet been concluded.
LNG
For the time being, Europe remains mainly dependent on LNG. The leading Asian price for liquid gas remains stable, but also still on the high side. The level remains stable at a level of $13,58 per MMBtu.
Electricity price drops, but remains high
Meanwhile, prices on the electricity market are still high, although the price is clearly lower than last week. On Wednesday, November 13, the electricity price is €146,44 per megawatt hour. In the second half of the week, the electricity price was considerably lower. The price dropped to €78,16 per megawatt hour.
The main reason for the relatively high electricity price is also a reason for the rising gas price. Wind power lagged behind in Northern Europe again. In total, 21,1% of all electricity was generated by wind turbines. Add 6,2% of solar energy and you get a total of only 27,3% of electricity from these renewable sources. That is slightly more than half of what was generated by these sources for the rest of this year (roughly 50%).
As a result, 42,8% of all electricity was generated from gas. This caused a significant increase in the gas price. However, the demand for gas was, as in the last two weeks, alleviated by a significant use of the coal-fired power stations. In total, 14% of all electricity was generated from coal. Finally, a considerable amount of biomass was also burned. The total share of this energy source amounts to 8,2%.