Natural gas buffers sustainable energy market

Agricultural diesel continues to cost around €0,90 per litre. The price of petroleum and natural gas has been very stable for weeks. While the capriciousness of sustainable energy production is increasing.

Petroleum and natural gas production can be well planned, as has also been shown during the corona crisis. Production can be scaled up or reduced relatively easily and inventories are easy to build and relatively cheap.

Negative daily rate
Because there is no such buffering effect in electricity production by solar panels and wind turbines, predictions for the electricity market must be very accurate. Forecasts that are too high or too low are settled with TenneT, the operator of the high-voltage grids in the Netherlands, and the general balance-keeper on the grid.

Given the imbalance that has existed throughout the year between supply and demand for sustainable energy, it is obvious that the daily price will be negative again next weekend. After all, the radiant sunny weather in combination with the rapidly increasing surface of solar panels will most likely cause a significant peak in supply, while demand is less at the weekend.

But given the persistent heat, there is of course more demand for power due to the air conditioning that is running at full speed everywhere. As with solar panels, the number of air conditioners is growing rapidly. And compared to the past few days, the most intense solar radiation may be weakened by high clouds.

Maintaining a balance between peak production and what the grid can handle actually stands in the way of the further advance of sustainable energy from solar panels and wind turbines. The percentage of sustainably produced electricity therefore appears to lag far behind the share of natural gas, which has grown almost as fast as the amount of solar energy since January this year.

75% natural gas on total
Just as quickly as the share of energy from coal decreases, the share of gas as an energy source in the total increases. This is apparent from an overview of the ABN Amro bank. Since January, the share of natural gas in the total has risen rapidly from over 50% to 75% (including imported gas). But the longer-term trend since 2017 also shows an increasing share of natural gas in the total. While the share of energy from coal has steadily decreased since 2015 from almost 50% to barely more than 5% at the moment. The share of energy from biomass (including biogas) and nuclear energy remains marginal.

© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.