European electricity prices soared to the highest in almost a decade as an abnormal cold snap strained supplies tightened by power plant outages and worker strikes.
German and Belgian power prices for next-day delivery jumped to the highest since 2008, while those for France rose to a six-week high. Temperatures in northwest Europe are forecast to drop to as much as 4 degrees Celsius (9 Fahrenheit) below the 30-year average this week.
The cold is set to push French maximum electricity demand up 17 percent by Thursday from Monday’s level and coincides with low hydro availability after the driest December since 1959 and extended nuclear reactor outages. Freezing weather had already forced flight cancellations in Frankfurt, triggered blackouts in Switzerland and restricted shipping traffic on ice-choked rivers.
“Not many were prepared for this kind of cold, because we had quite a few mild winters before,” said Elchin Mammadov, an analyst at Bloomberg Intelligence in London. “This winter, I think we can definitely see quite a lot of volatility, especially if something goes off mid-winter,” such as a reactor outage.
Read here for more on the energy scramble amid Europe’s bone-chilling winter
German power for Tuesday rose to 90.50 euros ($95.84) per megawatt-hour, the highest since November 2008 for day-ahead prices, broker data show. Belgian prices climbed to the most since since May 2008, at 110 euros per megawatt-hour. German and Czech day-ahead rates settled at the highest since February 2012 at auctions held Monday.
Polar air from Scandinavia is set to bring icy conditions to some areas in Germany on Monday, with temperatures seen falling to as much as minus 20 degrees Celsius in some mountain regions on Tuesday, Germany’s national forecaster Deutscher Wetterdienst said on its website today.
Temperatures in northwestern Europe are forecast to average minus 0.5 degree Celsius Tuesday, 4.2 degrees below temperatures over the past 10 years, The Weather Co. data on Bloomberg shows.
German wind generation is set to plunge. Output is forecast to average 3.9 gigawatts per day over the next seven days compared with a one-month daily average of 15 gigawatts. Wind power was more than 10 gigawatts below forecast a day before in most hours on Monday morning, The Weather Co. data on Bloomberg shows. A gigawatt is enough to power 2 million European households.
“The situation remains tense for this week with low wind production,” said Ricardo Klimaschka, a power trader at Energieunion GmbH in Schwerin, Germany. “But it could change in the next week with warmer weather and more wind forecast.”
German temperatures next week are forecast to rise to 2.1 degrees compared with the 10-year average of 0.6 degrees, while German wind output may peak at 23 gigawatts on Jan. 25, according to The Weather Co.
Electricity supplies could be limited as workers at Electricite de France’s power plants plan to strike from 9 p.m. Paris time on Monday for 24 hours, according to grid operator RTE. There is also a strike notice for Tuesday at one of Uniper’s coal plants.
Six of EDF’s 58 nuclear reactors are offline. EDF was granted a two-week delay on safety checks for the Tricastin-2 nuclear unit in France for cold weather and asked for a reprieve on another reactor. RTE warned in November that it may need to take measures to reduce demand during a cold snap, including the last-resort possibility of rolling blackouts.
RTE trimmed its forecast for this week’s daily peak demand by 5 percent as temperatures may drop less than previously expected, according to the grid operator’s website.
Germany restricted the length of vessels on parts of the Main-Danube canal due to ice, while Romanian Energy Minister Toma Petcu warned last week that the country’s two major coal producers have reserves that would last only four days if consumption remains at peak levels.