European power prices climbed as a dearth of wind is worsening the region’s energy crisis.
The day-ahead price in Britain soared 26% to trade at its highest since early March, while the German contract gained 3.2%. Both markets rely heavily on wind to meet increasing consumption. When there’s low availability, more expensive stations that burn gas and coal will have to plug the gap.
“Wind generation is forecast to continue falling into tomorrow, providing bullish signals to day-ahead UK energy contracts on expectations of increased fossil-fueled generation demand,” analysts at Inspired Energy said in a note on Wednesday.
For Germany, which has the region’s biggest wind power capacity, calm weather is forecast to last into the first week of July, which means that actual output will remain very low. The slump in wind generation coincides with lower gas flows from Russia, which has sent prices for the fuel rallying again after a lull earlier in the month.
See chart below for German wind power forecast, according to Bloomberg’s model:
French day-ahead prices also advanced for a second time in three days. The nation is Europe’s biggest producer of nuclear power, but the fleet of 56 reactors is blighted by problems, including longer than normal maintenance.
France’s total output remains at about 50% of capacity, according to data from grid operator RTE. French unions have also called strikes that may last until the end of July, which will likely curb output from time to time.
The UK day-ahead power price rose 26% to 273.31 pounds per megawatt-hour on the N2EX exchange
German day-ahead power gained 3.2% to 325.48 euros per megawatt-hour in Epex Spot SE’s daily auction.
The French equivalent climbed 8% to 362.06 euros per megawatt-hour