Electricity price hike is likely
The prospects for electricity retail prices in September look bleak, given recent developments in the wholesale and futures markets.
High temperatures not only affect demand but also have effects on production, for example in electricity from nuclear reactors in France.
In the first 14 days of August, the average wholesale price of electricity in Greece has been at €122.48 per megawatt-hour, the second highest in Europe behind Italy (€127.92/MWh). Demand was met by renewable energy sources (41.7%), natural gas (38.3%), hydroelectric power (5.4%), lignite – also known as brown coal – (4.1%) and electricity imports (5.9%).
September natural gas futures at the Amsterdam-based Title Transfer Facility (TTF) have hovered over the past few days around €40/MWh and analysts predict that the price could rise as high as €50 in the case Russian gas flow through Ukraine is temporarily disrupted. This appears increasingly likely after the Ukrainian incursion into the Kursk region, where the Sudzha gas metering point is located.
Europe has mostly weaned itself off Russian gas imports since Russia invaded Ukraine in February 2022, but some countries, such as Austria, Hungary, Italy and Slovakia, still depend to a large extent on them. Gazprom provided, through the Sudzha point, about 15 billion cubic meters of gas, which accounted for 4.5% of Europe’s total consumption.
Competition for liquefied natural gas (LNG) with Asia further constrains the European market, reducing gas reserves for the winter.
The heatwave afflicting Western Europe has not only led to a demand spike but has also reduced French nuclear power production. French utility EDF has cut about 2.4 gigawatts of capacity from three nuclear reactors in southern France and will have more cuts by next week. According to energy market news wire Montel, EDF has severely restricted capacity at three nuclear power units and plans to shut down a fourth completely for 24 hours.
At the Golfech power plant, in the southern department of Tarn-et-Garonne, capacity in one unit had been reduced by almost 80% by Wednesday, while the second reactor will be out of commission until August 26 to save on fuel, and for safety reasons. Temperatures in southwest France have exceeded 40 degrees Celsius.
