The gas price is showing a clear recovery after the decline of the past few weeks. The quarrel between Donald Trump and Volodymyr Zelenski in particular drove up prices. In addition, electricity became more expensive, as the production of renewable energy decreased.
The gas price has corrected again after a sharp drop. On September 26, the price of gas had dropped to €41,54 per megawatt hour. On Monday, March 3, the TTF had risen again by 8% to €45,66.
The sharp increase in gas prices followed the explosive row between US President Donald Trump and Ukrainian President Volodymyr Zelensky. It is unique that such rows are fought out in front of the press. This explains why the world was so shocked when the talks between the leaders derailed. As a result, confidence in a quick peace has fallen considerably. This has caused the gas market to abandon the expectation that Europe will soon import Russian gas again.
The market expects that the peak level of 10 February of over €58 will not return for the time being. Prices rose sharply during that period because gas reserves were declining rapidly. Now that it is March again, the end of the heating period is in sight. It helps that March started quite warm, with temperatures in the Netherlands of around 10 and sometimes even 15 degrees. In the last week, even more gas was extracted from the reserves than in previous years, but in contrast to the first two months of the year, only slightly more gas was extracted from the reserves than average on most days.
Decline is not obvious
Despite these favourable factors, analysts seem to have little confidence that prices will fall further soon. The market is already preparing for colder weather at the end of March. The expectation is that gas consumption will increase somewhat at the beginning of spring and the end of summer. In general, this is the period when the filling season starts again. The cold weather may cause this phase to start somewhat later than normal.
In addition, the gas price is expected to increase in this new phase, as extra gas is needed to fill the reserves. Traditionally, gas was always cheaper in the summer than in the winter, as demand for heating homes increases then. Last year, the dynamics were reversed. Filling the reserves resulted in higher prices in the summer, partly because a lot of LNG was used for this. This liquid gas is expensive in the summer, because LNG is used to meet the Asian power demand for air conditioners. Market analysts expect this trend to continue in 2025.
Electricity price increases
The electricity price has meanwhile taken a step up. The price of electricity was mainly above €100 per megawatt hour last week. On Sunday 2 March the price was at its lowest level. That day electricity was traded for €90,62. At the peak on Tuesday 25 February the price was €133,77 per megawatt hour.
The higher prices are, as is now customary, largely attributable to the performance of renewable energy sources. Last week, the yields from renewable sources clearly decreased. Wind energy in particular was less available. The yields from this decreased from 32,2% of the total electricity demand to 26,7%. The share of solar power decreased from 17,1% to 15,2%. All together, this resulted in a decrease in the share of energy from the two renewable sources from 49,3% to 41,9% of the total electricity demand.
As a result, the percentage of gas-fired power stations increased from 24,3% to 29,6%. The growth of the relative share of coal-fired power stations from 12,7% to 15,1% put some pressure on prices on the electricity market. This is also interesting due to lower CO2 prices. Partly due to the weak generation of electricity from renewable sources, €2 per tonne was paid for CO83,92 rights at the end of January. On 28 February, the price had fallen to €71 per tonne. Partly because of this, the higher share of fossil sources is currently causing less upward pressure than roughly a month ago.