The intense heatwave that gripped most of Europe in July had quite an effect on humanity — not just on human comfort and on agriculture, but also on the price of electricity. Continental Europe saw the price of day-ahead electricity rise significantly during the heatwave — coinciding with, and partially the result of, reduced levels of supply caused by the heatwave, according to new data released by Platts.
A worrying sign… especially when you consider that such heatwaves are expected to greatly increase in frequency and intensity in the coming years as the result of climate change.
“Europe recorded temperatures 10 degrees Celsius higher than seasonal norms in several areas, which greatly increased power demand for air conditioning,” stated Anna Crowley, Platts European power editor. “Simultaneously, there was a dip in hydro and wind production from early summer highs and a number of coal and nuclear outages that served to reduce capacity margins.”
Platts (a leading provider of energy, petrochemicals, metals and agriculture information) has more:
The Platts Continental Power (CONTI) Index increased 19.8% in July compared to June, up from €33.50 per megawatt hour (/MWh) to €40.13/MWh. The June average had been unusually low due to Germany’s record solar output flooding a system already awash with hydro and wind power.
Despite the month-over-month surge in the CONTI Index to more than €40/MWh in July, it was down nearly 12% when compared to a year ago. West European electricity demand remains well down on the pre-credit crunch levels of 2008, with use continuing to decline in the UK, Germany, Spain and Italy. Power prices in the UK for day-ahead needs averaged £48.74/MWh in July, up 1.8% from June and up 13.8% from July a year ago. The day-ahead price of natural gas in the UK also rose last month as the market realigned with Continental Europe.
At Continental Europe’s most liquid natural gas trading hub, the Dutch TTF, the average price of day-ahead gas in July was €26.05/MWh, down from €26.25/MWh in June. On a year-over-year basis, the July price well-exceeded that of a year ago, with the market reflecting higher oil prices and the indexing of gas to oil in long-term pricing contracts rather than the retreat in gas use for power generation.
“The average price of UK natural gas in July was up 8% from June, when the price was abnormally low due to an outage on the UK Interconnector to Belgium preventing exports,” stated Crowley. “The month-over-month July rise reflects a return to service of the gas link, and a return to near-parity of the basis spread for day-ahead gas on Belgium’s Zeebrugge trading hub and the UK’s National Balancing Point hub.”
With heatwaves such as the July one expected to become considerably frequent — and much more intense — the outlook for continental Europe’s energy security doesn’t look that great. In particular, nuclear power and centralized coal, both of which are much more susceptible to such issues than small-scale solar or wind energy are, are due for some trouble. The future of the continent, with regard to energy security and climate change, will certainly be interesting.
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