Calm winds drive electricity prices to 600 euros per megawatt hour
A slump in wind power generation is leading to massive price spikes in Europe, while gas-fired power plants are left to pick up the slack.
Quick Look
- European electricity prices rose to over 600 euros per megawatt hour on Monday.
- The reason is a persistent lull in wind in northwest and central Europe, which is drastically reducing the production of renewable energy and forcing the use of expensive gas power plants.
AI-generated summary
Why It Matters
Gas power plants determine the limit price for electricity when wind and solar energy production is low (dark doldrums). Natural gas prices have already increased this year.
European electricity prices rose to more than 600 euros per megawatt hour for the evening peak hours on Monday. The reason for this is a slump in wind power generation. The development shows how tense the electricity markets can be when renewable energy production weakens.
Electricity generation from wind and solar energy is expected to remain low in northwestern and central Europe until Wednesday. A slow-moving weather front is bringing calm and cloudy weather to some of the region's largest power markets, public and commercial weather services are forecasting.
The lull in wind is likely to be particularly pronounced in Germany, Great Britain and the Benelux countries. The British network operator therefore warned of a possible tense power supply situation on Monday morning and predicted a gap of around 1.4 gigawatts.
Since natural gas prices have already increased this year, electricity prices in Europe are also at a high level. Gas-fired power plants often determine the limit price for electricity. This effect is particularly clear in cold, windless phases with little direct sunlight, which are referred to as dark doldrums. Then production from renewable energies drops and more expensive fossil power plants have to step in to meet demand. The more frequently such phases with little wind and solar power occur, the more likely there will be further price peaks this winter.
Higher heating requirements could further aggravate the situation on the electricity markets. Temperatures are expected to be 1 to 3 degrees Celsius below usual this week, said MetDesk meteorologist Ben Davis.
The ongoing pressure on the electricity markets is also reflected in the high forward prices. December contracts in Germany and France are already trading at just under 200 euros per megawatt hour on the EEX, more than twice as high as a year ago.
French day-ahead electricity prices for Monday were recorded at an auction on Epex Spot at 334.12 euros per megawatt hour, the highest level since December 2022. In Germany, the day-ahead price was 345.64 euros per megawatt hour. For individual quarter-hours in the evening the prices were even over 600 euros.
What to Watch
AI outlook — possibilities, not facts
Further price peaks as the darkness continues.
Likely · Within weeks
Open Questions
- How long does the calm wind last?
- How will the power grids respond to the forecast gap?
