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Europe electricity price has fallen thanks to favorable weather forecasts

10 January 2022

Weather forecasts pointing to rising temperatures are good news for the price of electricity in Europe, which has fallen compared to record highs last month, according to Bloomberg.

The risk of low temperatures has diminished against the background of forecasts that show warming weather and intensifying winds in the coming weeks. These forecasts have led to lower prices for electricity delivered to the German market in February, a reference price for the entire continent. These quotations fell by 9.9% during last week, even though the reference price for natural gas delivered the following month rose by almost 35%.

Concerns about nuclear power production in France, which were the basis for December’s price increases, persist but are offset by favorable weather forecasts, says Sabrina Kernbichler, an analyst at S&P Global Platts, according to Agerpres.

Under these conditions, prices for electricity delivered in February fell to 262.50 euro for a Megwatt-hour on Friday, from a peak of 517.53 euro for a Megwatt-hour recorded in December. At the same time, however, gas traders are following the evolution of Russian deliveries, given that limited deliveries have pushed prices up on Friday to a value of more than 100 euro for a Megwatt-hour.

Bloomberg points out that although prices for electricity delivered in February fell, quotations for long-term contracts continue to rise. For example, prices for over-the-year supply contracts have risen by 10% this week, suggesting that in the long run the costs of delivering electricity across the continent will remain high.

Autor: Energynomics

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