Europe’s Freeze Lifts Short-Term Power Prices as Grids Pressured

Short-term European power prices rose as freezing temperatures and low winds forced grid operators to scramble to tackle a supply squeeze.

(Bloomberg) — Short-term European power prices rose as freezing temperatures and low winds forced grid operators to scramble to tackle a supply squeeze.

Day-ahead power prices for Monday in the UK and France climbed to the highest in more than a month. UK day-ahead power settled at £187.7 a megawatt-hour in auctions on Sunday, while French prices settled at €204.9.

After a mild start to the year eased pressure on Europe’s energy system, icy conditions across northwest Europe are ramping up heating demand. Britain’s grid operator is asking some households to cut energy use on Monday and is likely to extend the request to Tuesday, underlining the continuing risks from the region’s power crunch.

Read: UK Asks Consumers to Turn Down Power as London Freezes 

Less power is traded in the short-term intraday and day-ahead markets than over months or years in advance. However, it’s where companies fine-tune their demand, including some industrial users who may hedge less volume in advance.

Even with grid tightness, lower gas prices mean that power tariffs are still much lower than a squeeze in mid-December. 

“The market has a bit more experience now of being able to source imports during the evening peak when needed without having to pay a huge premium,” said Glenn Rickson, head of European Power Analysis at S&P Global Commodity Insights.

Milder weather is expected to return across northwest Europe next week, helping to ease demand. German and French month-ahead power contracts declined on Monday as gas prices continued to fall.

–With assistance from Todd Gillespie.

More stories like this are available on bloomberg.com

©2023 Bloomberg L.P.

Close Bitnami banner
Bitnami