Electricity prices jump to an all-time high – over 2000 percent higher

Dusseldorf The electricity price jumped to a new all-time high this week: a megawatt hour (MWh) now costs 563 euros in daily trading on the Leipzig EEX exchange. A year ago the price was just under 23 euros – an increase of more than 2347 percent.

“Prices are rising all the time because we have extreme shortages in France, Austria and Italy,” explains electricity expert Mirko Schlossarczyk from the energy consulting company Enervis in an interview with the Handelsblatt. The uncertain situation on the energy markets in general would then come on top of that.

Electricity, coal, oil and gas prices have been rising steadily since last autumn. Initially it was the sharp increase in demand after the global corona lockdowns, but since the end of February it has been the physical shortage of gas in particular that has been driving prices.

Whenever the demand for electricity cannot be covered by nuclear and coal-fired power plants alone, gas-fired power plants step in by the hour. Due to the currently very high procurement costs for the raw material and a lower level of efficiency, the expensive gas-fired power plants set the pace on the stock exchange.

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Currently, however, the situation in Germany’s neighboring countries in particular is having a strong effect on prices. “A large proportion of French nuclear power plants are not running, which means that Germany is exporting electricity to France for the first time in years,” explains Schlossarczyk. Many countries are connected to each other via the so-called European interconnected grid.

If Germany needs more electricity than it is currently producing itself, it imports electricity from neighboring countries and vice versa. In this way, the grid always remains in line with supply and demand because the electrical energy can hardly be stored.

On the website of Entso-E, the European Association for the Cooperation of Transmission System Operators (TSOs), it is always possible to read when which country supplies how much electricity to its neighbors or imports it from there. On Friday afternoon (2:30 p.m.), for example, Germany exported electricity to Austria, the Czech Republic, Poland, Sweden and Luxembourg, but at the same time imported quantities from Switzerland, Belgium, Denmark, France and the Netherlands.

While Germany is currently supplying more electricity than it supplies itself, it has been the other way around in recent weeks.

Water shortages are causing problems in France, Italy and Switzerland

Overall, there is enough electricity, only in individual countries the generation capacities are currently fluctuating unusually strong. In addition to France, Switzerland and Italy in particular are struggling with extreme water shortages. In particular, the output of the many hydroelectric power plants is currently very low, says Schlossarczyk.

>> Read here: Germany is saving gas – but too much is still being burned to generate electricity

The expert believes that the situation with regard to water shortages, heat and the technical problems of French nuclear power plants could ease by the winter, but the German coal-fired power plants that are returning to the grid will also help. “But that won’t bring prices down significantly,” he says.

“Everything that you see in electricity prices now is still paid for with contracts at the prices of two or three years ago. Now the utilities have to start stocking up again.” Mirko Schlossarczyk, expert at the energy consultant Enervis

However, there are risks for the winter that are difficult to foresee now: what will happen next with the war in Ukraine? How much gas still comes from Russia or then anything at all? Will the LNG terminals planned in Germany go online after the announcement, and will there be enough LNG on the world market?

These uncertainties are also responsible for the all-time high in electricity prices. That’s why a megawatt hour of electricity in the fourth quarter now costs almost 600 euros – that’s also a sad record.

The hunt for records on the electricity markets is only gradually affecting consumers

And while gas consumers have had to deal with massive price increases for months and now also with the gas surcharge, the big surcharges for electricity customers are pending: “Everything you see in terms of electricity prices now is still with contracts with the prices of two or three years ago paid for years. Now the suppliers have to start stocking up again,” predicts Schlossarczyk.

Juicy serve

185

percent

Gas customers’ bills will be more expensive this year. For electricity, it’s only 31 percent so far. That should change next year.

While gas customers already have price increases of 185 percent compared to the previous year, the same value for electricity consumers is only 31 percent. That should change next year.

“Although the abolition of the EEG surcharge has recently brought a slight relief in the electricity price, in the medium term consumers will have to be prepared for prices to continue to rise significantly,” says Steffen Suttner, Managing Director Energy at the comparison portal Check24.

However, the introduction of the so-called gas surcharge will contribute significantly less than feared. The 2.4 cents that must also be priced in for electricity-producing gas-fired power plants via the allocation system from October lead to an average price increase of just five euros per megawatt hour, as Enervis calculates. In view of the current exchange electricity prices, that is just 0.8 percent.

More: After the gas shortage, there is a threat of electricity shortages – How the drought endangers Europe’s supply.

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