European Power Prices Jump to Records as Gas Crunch Bites
(Bloomberg) -- British and Spanish electricity for the next day surged to a record in an early sign of what’s to come this winter.
The global crunch in natural gas supplies has already sent energy prices soaring and the shortage is being compounded by low wind speeds and a series of power plant outages in the U.K. Consumers are bracing for price hikes, while the regulator announced on Tuesday that two suppliers had ceased trading.
An auction for British power to be delivered on Thursday cleared at 277.30 pounds ($381.55) per megawatt-hour on N2EX, more than double Wednesday’s price. In the equivalent Spain auction, the price jumped 4.5% to 141.47 euros per megawatt-hour.
Surging power prices in Spain are now becoming a political issue as the high energy costs threaten an economy still recovering from the pandemic. Spain’s Minister for the Ecological Transition, Teresa Ribera, told reporters Wednesday that the government is working on measures to cut power bills back to 2018 levels. Spanish day-ahead prices in September 2018 were about half what they are today.
“The price of power and electricity can’t slow down the recovery for families and the industry,” Ribera said.
Spain already announced a plan to speed up the construction of new solar plants, but those installations won’t be built quickly enough to cut prices in the next few months.
In the U.K., several unplanned halts are crimping supply, including units at Drax Plc’s biomass plant, RWE AG’s Didcot B, EPUKI’s South Humber all halting unexpectedly. Electricite de France SA’s Heysham 1.1 nuclear reactor is due back on Thursday after an extended outage.
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While it’s usual for power plant operators to carry out last minute maintenance ahead of the heating season starting in October, the U.K. has a more serious problem looming. Britain is becoming increasingly exposed to dips in wind generation a situation that will worsen as coal stations shut in the next three years and aging nuclear units close early. It’s a political issue as these high prices, even in the short-term, will feed through to consumer bills.
A lull in wind speeds in much of Europe this year has aggravated the high prices. Countries have increasingly had to increase coal generation to fill in the gap.
- Great Britain wind energy generation forecast:
U.K. peak demand is forecast to increase slightly to 33,752 megawatts at 7:30 p.m. on Thursday, compared with 33,675 megawatts at 8 p.m. Wednesday, National Grid Plc data show.
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