Analysis Energy
Gas price reaches highest level in 10 months
Due to the escalation of the war in the Middle East, the gas price reached its highest level in ten months this week. Meanwhile, despite a relatively low production from renewable sources, the electricity price remains stable and relatively affordable.
The gas price has slightly decreased after the rise earlier this month. On Tuesday, October 1st, the TTF stood at €39.27. Until Friday, October 4th, the gas price was on the rise. That day, gas was traded for €40.98 per megawatt-hour. On Monday, October 7th, the price decreased to €39.63.
With almost €41 per megawatt-hour, the gas price reached the highest level in as much as ten months. The increase is the result of the further escalation of the conflict in the Middle East. Last week, Iran launched a missile attack on Israel. Since then, we have been waiting for a response. Initially, the message from US President Joe Biden that the United States does not support an attack on the nuclear infrastructure brought some calm. However, on Friday, talks with the United States about attacks on oil infrastructure led to higher gas prices. The escalation of the conflict could have consequences for LNG deliveries from Qatar. Liquid gas from that country is shipped through the Red Sea, which is adjacent to Israel.
Meanwhile, the leading Asian LNG price does not provide much reason for a lower TTF. The price is currently quite stable, interrupting the decline of recent weeks. On Tuesday, October 1st, LNG was traded for €13.13 per MMBtu. On Friday, October 4th, the price was only 4 cents lower, reaching €13.09.
Significant decrease
The fact that the price took a step down on Monday is partly due to more favorable temperatures. In addition, the expectation of more wind in Europe is leading to lower gas prices. Due to a higher efficiency of wind turbines, the market has revised its expectations for the use of gas power plants downward. Additionally, the full European gas reserves continue to exert price pressure. Currently, the European reserves are filled to 94.4%.
Stable electricity price
The electricity price remained more stable than usual this week. On Tuesday, October 1st, electricity was paid for at €67.40 per megawatt-hour. On Friday, October 4th, the electricity price reached its peak. On that day, electricity was traded for €95.81 per megawatt-hour. On Sunday, October 6th, the price decreased to the lowest point of the week at €54.52.
This week, renewable energy once again proved to be the most dominant factor in the electricity market. The yields from solar and wind energy were relatively low this week. In total, 46.1% was generated by the two almost free sources. 19.8% of the electricity was generated by solar collectors. The total wind energy yields amounted to 26.3%. Since spring, a share of at least 50% from these sources has been common.
However, the electricity prices were not too high this week. This is due to a relatively large share of wind energy. As autumn truly sets in, less solar energy and more wind energy are generated. This ensures that prices are consistently kept down, as wind tends to remain fairly stable, while solar energy has clear peaks in the middle of the day.
Wind proves decisive
Most of the week saw quite a bit of wind energy, which helped to keep the base price down. However, on Tuesday, October 1st, the price was on the high side due to a limited number of sunny hours. Around noon, the prices only dropped to around €60. On the other days of the week, prices in this part of the day dropped to a level of a few euros. On Friday, October 4th, the price rose significantly throughout the day, as it was virtually windless. Although the sun was shining, the price was low around noon, but for the rest of the day, the price was barely affected.
