The gas price has taken another big step up this week. Traders are speculating on much higher prices this summer, which is driving up the price. Meanwhile, the consumption for electricity generation is on the high side due to the weak wind force, which is also driving up the electricity price.
The gas price has taken a big step up this week. Since Tuesday 4 February, gas has become 11,5% more expensive. On that day, gas was traded for €52,05 per megawatt hour. The following week, the price rose to €58,05.
This brings the gas price to the level of the aftermath of the first year of war in Ukraine and to the highest level since January 2023. The increase is mainly due to the rapid consumption of gas reserves. The filling of the reserves has now fallen to 49%. This is the lowest level since the start of the gas crisis in 2022. By comparison, last year the reserves were still 67,5% filled at this time of year. The rapid consumption of the reserves is resulting in concerns about the filling this summer.
For the time being, it does not look like this trend is reversing. Consumption of reserves is still considerably above average. In the first week of February, consumption from reserves was 53,4% higher than average. As a result of the rapid consumption, there will be more pressure on the filling process this summer. Traders expect gas to become considerably more expensive and this is already reflected in the market. In the meantime, 3.000 contracts have already been concluded in July for prices of between €80 and €100 per megawatt hour.
An important reason for the rapid consumption is that the production of wind energy is disappointing. The wind power has been exceptionally low for the time of year all winter this year. As a result, the demand for gas for electricity generation is considerably higher than in previous years. In addition, this winter is not exceptionally mild this year, unlike the last two winters. Mild periods alternate with harsher periods this year. The expectation is that it will become colder again in Northern Europe this week. This has led to the significant increase in recent days.
Electricity price
The electricity price was also consistently high this week, but did not show a significant drop at any point. On Sunday 7 February, the price of electricity reached its lowest level of the week at €114,65. On Saturday 6 February, the price was at its highest, and the Epex noted €139,40.
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Prices on the electricity market are now structurally above the average level of 2024. The previously mentioned low production of wind energy has ensured that relatively much energy is generated from fossil sources. This was also the case this week. Total production from solar and wind energy amounted to 36,9%. This is considerably lower than the level of around 50% that was common last year. The low productivity of wind energy in particular is slowing down the productivity of renewable energy. Only 25,3% of all energy was generated by wind turbines.
As a result, 31,7% of all energy was generated from the now very expensive gas. In addition, 17,8% of all electricity came from coal-fired power stations. The low commodity prices make this source relatively attractive. The price of coal fell significantly this week to £107,25 per tonne, according to the Newcastle Coal Futures. That is the lowest level since the end of May 2021. However, there is a catch. Due to the significant generation from renewable sources, European CO2 prices have taken a significant step higher. At the beginning of December, the price was still €64,43 per tonne. According to the latest available quotation from Monday 3 February, the CO2 price had risen by 27,7% to €82,28 per tonne.