Following Russia announcing it was planning on closing Nord Stream 1 for three days for maintenance in August, gas and electricity prices have continued soaring higher in Europe, with electricity prices hitting fresh records for Germany and France.
In Germany, electricity futures for next year jumped to an all-time high of €800 a megawatt-hour. European gas future prices have also hit a record, closing at €318 yesterday. Although they reached up to €345 in March, that was an intraday record, and did not close at that price.
Inflation, which has been driven partly by rising energy costs, has crushed German consumer sentiment, bringing it to a record low, according to research from Growth for Knowledge (GfK)
Gfk’s consumer barometer reports a drop of 5.6 points in July to -36.5, a drop that surprised markets.
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Wholesale gas prices also hit a new record today on the Dutch gas futures exchange, reaching €320 per megawatt hour. In mid-August 2021, a megawatt hour only cost €26, representing a massive increase of more than 1,200 percent.
The cost of French power jumped to a fresh record as its nuclear plants are confronted with outages due to drought and technical issues. France derives a substantial share of its power from nuclear energy, with the country’s current nuclear woes having a knock-on effect across the entire European energy market.
State-owned Electricite de France SA’s announced that more of its reactors will take longer to come back online after they were halted, with the outages expected to reduce output by 8,380 megawatts, representing nearly 14 percent of France’s total nuclear capacity.
“In France, only half the reactors are running,” said German State Secretary Patrick Graichen, who serves in the economy ministry.
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Russia’s state-owned Gazprom announced that the vital Nord Stream 1 gas pipeline will be shut off for three days of maintenance on Aug. 31. However, there are fears that Russia may not restart flows, which have already been reduced to approximately 20 percent of the normal levels recorded last year. Even if supplies come back online, gas prices may rise further due to uncertainty, and Russia may implement periodic shutdowns in the future that further squeeze Europe.
At the Pauluel 4 reactor in France, planned outages for six reactors have been extended, and a new one was announced. While these type of outages have lasted only a few days in some cases, others have lasted for as long as two months.
French power for next year soared to €880 ($879) a megawatt-hour, representing a 1,000 percent increase from a year ago. However, French energy prices are capped for consumers, meaning that so far French end-consumers have not seen massive increases in their bills, with the government paying the difference.
European countries remain in crisis mode, searching for ways to reduce power costs and shield citizens from soaring energy bills. On Friday, the U.K. announced that the price cap on energy bills would be increased by 80 percent. Millions are now expected to be hit with bills approximately three times higher than last winter’s, increasing the odds of recession.
