Power prices across the EU jumped to a fresh record high on Tuesday, as natural gas costs climbed further on falling supply from Russia, data from the European Energy Exchange AG shows.
Benchmark day-ahead prices in Germany advanced to €490.79 ($497) per megawatt-hour, from June’s average of €218.03, according to market data provider Nord Pool.
- The current prices are almost six times higher than in August 2021.
The EU’s energy market is rattled by fears over whether power plants will be able to provide enough electricity this winter amid the tightening gas supply.
Gas prices in the region have quadrupled this year, driven by the drop in deliveries from Russia due to Ukraine-related sanctions and technical setbacks.
EU countries have been trying to diversify imports by buying more liquefied natural gas (LNG), as well as increasing supplies of pipeline gas from Norway, Algeria and Azerbaijan.
- However, according to the EU’s top diplomat, Josep Borrell, the bloc is “approaching the limits of what extra gas” it can buy from “non-Russian sources.”
- Meanwhile, France has increasingly turned to nuclear power to generate additional electricity, while other EU states have been reviving coal-fired plants.
Nevertheless, according to Rystad Energy analyst Fabian Ronningen, there are no signs of the “extreme” price rally abating, as the additional nuclear, hydropower and coal capacities aren’t enough to offset the effects of diminishing Russian gas supplies.
“Prices will continue to increase towards the winter, on the condition that the supply situation from Russia is not improved.
That is still the big joker and will continue to be a price driver in the power market,” he told Bloomberg.