The price of gas has increased significantly this week in the run-up to the filling season. The expectation is that a lot of gas will have to be purchased this year and since that has to be purchased on the LNG market, prices are rising considerably. Meanwhile, the price of electricity has also increased again in recent days, because generation from renewable sources has clearly decreased.
The price of gas has taken a big step up this week. The price of gas has increased by no less than 12,3% this week. On Tuesday 28 January, gas was traded for €48,25 per megawatt hour. A week later (on Sunday 3 February) the price rose to €53,60.
This brought the gas price to its highest level since October 30, 2023. The cold weather in Northern Europe has caused demand for gas to increase significantly. In recent weeks, temperatures in the Netherlands, Germany and Scandinavia, among others, have been below the seasonal norm, causing heating systems to work extra hard.
This resulted in significantly more gas being extracted from reserves between 6 and 24 January than average. It is noteworthy that reserves were actually less depleted in the last week of January than elsewhere, while it was also colder in this period. This is due to exceptionally strong yields from renewable sources. In the first four days of last week, for example, no less than 65% of electricity in the Netherlands was generated from renewable sources (including biomass), which caused the demand for gas to generate electricity to fall significantly in this period.
Prices remain high
Although prices have risen significantly due to low temperatures and low electricity production from renewable sources, market analysts expect the higher prices to continue for a while. The average price in 2025 is expected to be higher than a year ago. In 2024, full reserves caused prices to be much lower. In addition, the price dropped significantly in 2023, as it was concluded that reserves hardly needed to be replenished in the summer.
This year the situation is the opposite. Once again the market is starting to look ahead to the filling season. This time however the market is coming to the conclusion that the reserves are already a lot emptier than average. The European reserves were filled for 1% as of 53,1 February. Based on the long-term average however you would expect the reserves to be filled for 56,3%, while the filling level in late summer was still more than 5% above the long-term average. Market analysts are therefore coming to the conclusion that it will be quite a job to replenish the reserves this year. Since the market is mainly dependent on LNG for this, it is expected that the prices in that period will be significantly above last year's level.
Electricity price rises sharply
The electricity price was also higher than last week, but compared to the period before, the electricity price remained reasonably in check. Between January 30 and February 2, electricity was traded for prices well above €130 per megawatt hour. Last week we saw a lot less of such peaks, although the peaks were clearly lower than in mid-January. During that period, prices were regularly above €200 per megawatt hour.
Last week, electricity prices again showed a strong dependence on the performance of renewable sources. As previously indicated, the strong performance of renewable energy at the beginning of last week resulted in lower prices. In the second half of the week, however, performance decreased significantly from around 65% to around 25% of electricity demand per day, causing prices to increase significantly. On average, solar and wind energy generated 42,3% of all Dutch electricity.
However, the weaker performance of the second half of the week did not result in a large share of gas in the electricity mix. The total share of gas-fired power stations came to 27,2% last week. This is mainly due to the significant utilisation of coal-fired power stations. In total, 16,1% of all electricity was generated by the fuel. This put significant pressure on prices, as the price of coal last week reached the lowest level since 114,53 February, at between €118,50 and €21 per tonne.