Key European power price doubles in 2 months as crisis deepens
EUROPEAN power prices jumped to a fresh record as natural gas extended gains, deepening the energy crunch that’s threatening to plunge the region into a recession.
Next-year electricity rates in Germany advanced as much as 3.2 per cent to 475 euros (S$667.4) a megawatt-hour on the European Energy Exchange — almost 6 times as much as this time last year, with the price doubling in the past 2 months alone.
The market is being driven by concerns over whether Europe’s tight gas supplies will be able to generate enough electricity this winter. France’s nuclear capacity is extremely low, denting the possibility of power exports in the months ahead, and heat waves and drought on the continent are straining infrastructure in the short term.
Rising energy prices are feeding through to household bills and the cost of everything from making food to heating glass. Energy is driving inflation across Europe, pushing consumer-price increases into double-digit territory.
In the UK, the household energy price cap is set to almost double at the start of October on the back of rising wholesale costs. The wholesale price of UK electricity for that month has jumped about 7-fold in the past year to roughly £591 (S$982.8) a megawatt-hour on the Intercontinental Exchange.
European governments are looking at measures on how to ease the pain and impact that soaring energy costs are having on economies. In France, the state plans to fully nationalise Electricite de France, the embattled nuclear power utility that’s now struggling to keep its plants going in the blistering heat.
There’s no clear sign of the price rally abating soon, said analysts at Danish utility Energi Danmark.
“We expect further price climbs this week unless we receive some noteworthy bearish signals surrounding first and foremost gas,” it wrote in a note on its website.
Benchmark Dutch gas futures for next month extended last week’s gain, climbing as much as 3.9 per cent in Amsterdam. BLOOMBERG
Share with us your feedback on BT's products and services
