Although the current weather forecast for February is favourable for European electricity prices, gas reserves must continue to be used economically. The load of gas storage facilities is of decisive importance in terms of coping with the next winter.
Warm and windy weather has led to lower electricity prices across Europe, but winter, not to mention the energy crisis, is far from over. February, which is statistically the coldest month, is yet to come, and a drop in gas prices could pose additional challenges.
New Year’s Eve brought a heat wave to Europe, making electricity prices lower than normally seen in recent months. The market price of natural gas also fell to the level it was last before the Russian invasion of Ukraine.
The warm and windy weather as well as lower energy consumption during the holidays made it possible for both Estonia and Europe in general to enjoy electricity prices with the minus sign at times and to fill gas reserves instead of emptying them.
Warmer weather, higher wind energy output and lower consumption made it possible to significantly lower the price of electricity last week compared to previous weeks. While the decision to invest in the Sopi-Tootsi Wind Farm added optimism for the coming years, the postponement of the start-up of nuclear reactor Olkiluoto 3 to March added clouds of worry to our region despite the quite successful coping with the energy crisis so far.
Last week’s electricity prices stayed at the same level as the previous week, rising just enough to reach the third most expensive position on the all-time list, after two record weeks last August. This week’s warmer weather and the end of nuclear plant repairs in Sweden will bring down electricity prices.
The arrival of the cold wave in Europe will test the mitigation measures for the energy crisis, accelerating the depletion of gas reserves. The situation in Scandinavia and the Baltic countries is complicated by the maintenance of three powerful nuclear reactors, which is why reserve power plants running on fuel oil were launched in Sweden today.
Electricity prices rose by an average of €90 per megawatt-hour in our price zone last week, primarily affected by colder and drier weather with quite low wind power output. Most of the attention was on the price ceiling for Russian oil and the sanctions that have started to work, but the markets are still in a wait-and-see position.
The energy crisis and its possible solutions fuel passions and provide plenty of talk, but the impact of various mitigation measures on the electricity market is difficult to predict. Both gas and electricity prices continued to rise in sub-zero temperatures, and for the first time this winter, countries had to use their gas reserves. Despite the fact, they are rather optimistic about the coming months.
The cooler weather that arrived last week increased electricity consumption in Estonia and neighbouring countries, and thus the market prices. Good news was announced by NordPool – a second auction round to the electricity exchange will be added in December with the aim of preventing extreme price peaks in the future, similar to the ones we saw in August.
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