Europe’s Power Pain Deepens With Winter Weather in Sight

(Bloomberg) -- The energy crunch in Europe showed little signs of easing, with German and French power prices rising to record levels amid signs winter may be coming early this year. 

Power prices along the curve continued to surge Friday as Germany’s national weather forecaster said it expects a cold start to October following above-average temperatures this month. It’s a sign of what’s to come as Europeans enter the winter heating period and need more power and gas to stay warm.

The cost of electricity is continuing to rise even as Russia said it finished building a controversial natural gas pipeline that could bring some relief to the crunch in supply. 

Also see: One of the World’s Most Contentious Gas Pipelines Is Now Ready

In addition to the gas crunch, a mix of other factors is supporting the power market. Winds have been unusually quite, cutting down a key source of renewable power. In the Nordic region, hydropower reservoirs are sinking and remain below average, helping send the day-ahead price to the highest level in almost 11 years on Thursday. 

Day-ahead British power fell by 48% to 128.32 pounds ($178.02) per megawatt hour. It’s typical for prices to decline sharply over the weekend. Friday’s auction price was still about 2% higher than last Friday. U.K. prices for next month rose to the highest level in nearly 13 years.

Ireland’s electricity market operator has a warning for tight generation capacity margins in place until 9 p.m. local time Friday. A lack of power supply Thursday caused the operator to warn of blackouts and cut off an interconnector that sends electricity from Northern Ireland to Scotland. 

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