UK and European electricity and gas prices set record

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Consumers in the UK and continent of Europe face an energy price crisis as wholesale electricity costs hit record highs on Monday, boosted by low wind power and record highs in natural gas. I am.

Benchmark wholesale electricity prices for supply in Germany next year reached more than 90 euros per megawatt hour, about twice the level at the beginning of the year, and oil prices approached $ 150 a barrel in the summer of 2008 past It exceeded the record.

Gas prices in the UK and the continent of Europe, which reached record highs in recent weeks, also rose with the previous day’s price on the UK National Balancing Point, a virtual natural gas exchange, reaching £ 1.31 per therm. It’s more than four times this time last year.

Carlos Torres-Diaz, head of the electricity and gas market for consultancy Rystad Energy, said that this year’s decline in gas supplies from Russia has reduced storage inventories across Europe while shipping liquefied natural gas (LNG). He said he was forced to intensify competition with Asia. Price is high.

Gas levels in European depots are “well below the five-year average,” he said, warning of a shortage of supplies this winter. These are pushing up the price of electricity, as gas is used not only for power generation, but also for heating and industrial applications.

Squeezing was exacerbated by lower than expected power generation from the wind. “Wind power is usually seasonal, but this summer’s electricity generation is even lower than in the previous year, all spent throughout Europe, which is warm, dry and windless. It’s related to summer, “he said. ..

“In the last few months, electricity demand hasn’t been that high, so it’s not really demand that’s pushing prices, it’s the fuel mix,” he added.

In the UK, power supplies have been strained by the number of power plants closed for maintenance after much work was delayed by last year’s pandemic.

Prices paid in the capacity market to encourage the addition of short-term supplies to power plants jumped to record levels on Monday, with some power plants paying more than £ 4,000 per MWh for power generation. ..

In the UK, wind power provided only 4.9% of electricity generation on Monday afternoon, compared to an average of 18% over the past year, according to National Grid data. Coal-fired power plants produce similar quantities, more than double the standard in the last 12 months.

Rob Lalor, director of energy consultancy EnAppSys, said the so-called shoulder months, such as March and September, tend to be unpredictable, resulting in system growth even though demand is not as strong as in winter. He said it was often the time.

“We’ve seen peak electricity prices skyrocket because there aren’t many power plants available today,” Lalar said. “If the market is so finely balanced, even the slightest difference in availability can make a huge difference in price.”

According to Lalor, five UK power plant units will pay between £ 3,750 and £ 4,950 per MWh to balance the market, including the coal unit at Drax’s power plant in Yorkshire and the West Burton facility at EDF. It is said that it was broken. Both of these plants plan to completely shut down their coal units by September 2022.

Ofgem, the UK’s energy regulator, is widely expected to raise consumer so-called price caps further, and soaring prices could be reflected in households in the coming months.

Octopus Energy states that energy providers now sell fuels that are often below cost and “provide customers with more than £ 5 million a month.”

An Octopus spokesman said, “We have absorbed as much cost as possible for as long as possible.”

UK and European electricity and gas prices set record

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