Financial News Agency (Shanghai, Editor Xiaoxiang) News, During this Christmas holiday this year, while Europeans are receiving various Christmas gifts, they are destined to also receive an unprecedented sky-high electricity bill...
at local time In the Epex Spot auction held at noon on Sunday, the day-ahead average electricity price in almost all European regions except , Poland, and some Nordic countries. price) has risen above 300 euros/MWh. Among them, the average electricity price in France and Switzerland is close to 400 euros.
Colder weather, weaker winds and nuclear power outages, combined with very expensive natural gas prices, are causing Spain's day-ahead electricity prices to jump to a record level of 339.84 euros/MWh, while France's electricity prices have risen to 2009 prices The highest level since the peak was 382.08 euros/MWh. In addition, the current electricity price in Germany has risen to the third highest level on record, 331.37 euros/MWh.
1 megawatt is equivalent to 1000 kilowatt hours of electricity. For those who don’t know much about the history of electricity prices in Europe, here is a comparison: At this time in December 2019, day-ahead electricity prices in most of Europe were only in the range of 25-50 EUR/MWh, which means Compared with the same period last year, the current electricity price has increased at least six times or even more than ten times.
Along with the recent surge in electricity prices, obviously there are also natural gas prices in Europe. The European natural gas benchmark price, the Dutch TTF price, is now more than seven times higher than a year ago. It once exceeded 140 euros per megawatt hour last week and has jumped by more than a quarter in the past week or so. Prices for contracts that do not expire well into 2022 have surged along with those that require immediate delivery of natural gas, a sign that traders expect shortages to last for months.
At the same time, the price of carbon emission permits has also risen sharply, which has increased the burden on the industrial sector; utilities and other energy-intensive companies must purchase carbon emission permits to cover greenhouse gas emission credits.
Temperatures in many places in Europe have dropped to freezing point: Winter is really coming
Colder weather is undoubtedly the most obvious reason behind the current soaring electricity prices in Europe. Early winter snowstorms have already covered Central and Eastern Europe, and weather forecasts say that this week will usher in even colder weather.
Temperatures are forecast to drop below freezing in many European capitals and major cities this week, putting further pressure on a power grid already dealing with low wind speeds and a severe nuclear outage in France. Weather forecasting company Maxar Technologies Inc. predicts that the remainder of December in Europe will be colder than usual, and this situation will continue into January next year, with average temperatures in the first two weeks of January generally lower than in previous years.
Temperatures in Paris were near zero degrees Celsius on Monday, before dipping to minus 3.8 degrees Celsius (25 degrees Fahrenheit) later this week, according to Maxar's email report.
Traders in European energy markets have been on high alert in recent months for any signs of an approaching cold snap, which would directly lead to a spike in energy prices. Jean-Paul Harreman, an analyst at research firm Enappsys, has previously expressed concern that only a warm winter can help ease the pressure on the local energy market.
But obviously, such a beautiful vision has not been transformed into reality. What makes people feel particularly cold is that there are still about 70 days of "cold winter" to go before the end of winter in the traditional European meteorological sense at the end of February...
Chief executive of Trafigura Group, a commodity trader Chief executive Jeremy Weir warned last month that Europe could suffer rolling blackouts in preparation for a cold winter.
A scene that is more worrying than freezing temperatures: Russia and Europe are at odds
It is worth mentioning that, From the perspective of power supply, the current test that the European energy market needs to face is obviously not just cold weather.
EDF halted the Chooz-1 nuclear reactor at noon on Sunday until January 23 - part of an extended shutdown of France's four largest reactors due to safety concerns that will hamper the most critical month of the year. of available installed power capacity.
In the past, France usually exported electricity to neighboring countries during periods of peak power consumption, but now the country needs to import it instead.
Germany's three nuclear power plants will also be closed at the end of this year, so they will not be put into use during the coldest part of this winter.
In addition, according to Bloomberg's model analysis, Germany's wind power output will be less than 5,000 megawatts for most of Monday, far below the record high of 47,130 megawatts set on November 30. The current low wind speeds across much of Europe are further pushing up electricity prices across Europe.
Natural gas is the second largest source of electricity in Europe after nuclear energy. The market originally expected that until the spring, natural gas shipped from Russia would help ease supply tensions in Europe. However, with the recent geopolitical issues such as Ukraine between Russia and Europe, The possibility of this possibility is fading rapidly as the world continues to be at odds with each other.
German regulators suspended the certification process for the Nord Stream 2 pipeline in November. The pipeline would carry Russian gas directly to Germany, bypassing U.S. allies Ukraine and Poland. Germany's new Foreign Minister Annalena Baerbock has warned that the Nord Stream 2 project will not be put into use if the situation in Ukraine escalates, and bluntly stated that the project does not comply with EU energy legislation.
With the approval of the Nord Stream 2 pipeline blocked, Russia seems to have no intention of increasing natural gas transportation to Europe.
Only a small portion of the Yamal-Europe pipeline space carrying gas to Germany via Belarus and Poland was booked in Sunday's auction, according to data from a regional booking platform. Just this past weekend, the flow of natural gas transported from Russia to Germany through the Yamal-Europe pipeline also dropped sharply again.
Many people in the industry said that in the face of the cold winter, the European energy market is likely to have to fall into a helpless situation in the future, and some people's attention has even turned to the next winter. Data from consulting firm Wood Mackenzie Ltd. shows that if Russian gas exports maintain current levels, European gas inventories could fall to less than 15% of capacity by the end of March, a record low, and that's under normal weather conditions. .
Nathan Piper, head of oil and gas research at Investec Bank, said, "We believe that European energy market prices are likely to continue to rise throughout the winter, and the subsequent impact may even spread to more than two years in the future."
