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German Power Price Continues Decline on Warmer Weather Forecast

The cost of powering Europe’s largest economy next month is dipping as traders bet warmer weather will reduce demand.

German Power Price Continues Decline on Warmer Weather Forecast
High voltage electricity power lines near cooling towers at a lignite-fired power station in Germany. (Photographer: Krisztian Bocsi/Bloomberg)

The cost of powering Europe’s largest economy next month is dipping as traders bet warmer weather will reduce demand.

German power for February dipped almost 8% in trading Monday to around 230 euros per megawatt-hour, following a 3.8% decline on Friday, after further forecasts in much of central and eastern Europe diminished expectations for imminent cold snaps. German power, a benchmark for the continent, has fallen steeply from record levels in December, when prices reached above 500 euros.

Consistent forecasts for higher temperatures are helping drive down prices, said Fabian Ronningen, a power analyst at Rystad Energy. “Prices on many of the monthly contracts are also still coming down from the ‘panic’ high levels observed right before Christmas, where the price movement was extreme,” he said.

German Power Price Continues Decline on Warmer Weather Forecast

The move also is supported by higher-than-expected nuclear availability in France, Ronningen said.

German year-ahead power fell about 2.7% on Monday morning to 123.50 euros per megawatt-hour, while Nordic power for next year fell about 2.1%.

©2022 Bloomberg L.P.