European day-ahead power prices continue to soar for the third day due to an early-season heat wave driving up cooling demand, lack of renewable energy generation, declining nuclear power, and soaring natural gas costs.
Large swaths of Europe over the weekend experienced temperatures above 100 degrees Fahrenheit (38 Celsius). The hottest temperatures were from Spain to Germany to France.
Bloomberg notes power grids were under stress as wind generation in Germany and Italy plunged, forcing the need to increase the capacity of fossil fuel power generators to make up for the lost power. This placed a bid under electricity prices as the cost to generate power soars because of tightening supplies due to declining Russian flows.
“Already high gas prices, combined with low wind output will require less efficient, higher cost gas plants to fire up, pushing up prices,” BloombergNEF’s Andreas Gandolfo said.
Day-ahead power prices in France traded at 383.14 euros ($404.08) a megawatt-hour, up more than 64% from last week.
Besides tight fossil fuel supplies and a lack of renewable power from Germany and Italy, half of France’s 56 nuclear reactors are offline. France was the biggest net exporter of power last year, supplying many European countries.
French nuclear power is needed when renewable energy is lacking. Also, Brussels’ drive for net-zero carbon emissions and weening off Russian fossil fuels has made the energy crisis on the continent worse.
To avert a more profound crisis, German Vice-Chancellor and Economy Minister Robert Habeck said Sunday that the country is increasing coal generation to increase power output.
The decision comes just days after Russian gas company Gazprom announced that it was reducing supplies through the Nord Stream 1 pipeline for “technical reasons.”
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