Electricity prices in Europe hit record highs, amid fears that Moscow will permanently cut gas supplies
Prices for natural gas and electricity have been rising steadily since June after Russia decided to cut 60% of the capacity of Germany’s main gas pipeline. The rest of Europe also fears that it will have to do without Russian gas this winter.
As a result, the price of natural gas has doubled in the space of a few weeks to reach €180 per megawatt hour. Electricity prices are also rising as they are correlated to gas and coal prices.
Last Thursday, the price for delivering electricity in Germany next year was €355 per megawatt hour. In France, rates are also close to the top with €392 per megawatt hour. Belgium is slightly cheaper, with a price of €276 per megawatt hour for delivery in 2023.
“Germany and France are the benchmark in the European market,” Matthias Detremmerie, a broker at Elindus stated. “Both countries have the largest electricity generation in Europe. And given the interconnection in the ‘Old Continent, we can see this as one market.”
Gas supply is also uncertain in the future given some irregularities in French nuclear resources. And in Germany, it is the particularly low water level in the Rhine that could indirectly affect supply.
“In Germany, they want to produce electricity in every possible way. For example, the country wants to produce electricity from coal-fired power stations. But because the Rhine is particularly low, the supply of coal is compromised,” Detremmerie added.