European power prices jumped this week amid low wind power generation across most of northern Europe and lower nuclear power supply from France, just as cold weather sweeps through the continent, stoking demand for gas and electricity.
Germany's day-ahead power prices tripled from mid-November and were at $380 (361 euros) per megawatt-hour (MWh) for Friday, per data from European Energy Exchange cited by The Wall Street Journal.
A high-pressure system across Germany and France has resulted in very low wind speeds in recent days, pushing demand for fossil fuel-powered generation. Temperatures have also plummeted following a warm October and a mild start to November.
Now that cold weather has settled in most of Europe at the beginning of December and weather forecasts point to a colder-than-normal start to the winter in northern Europe and the UK, Europe's ability to keep the lights and heating on will be put to the test.
In the latter half of December, the chance of frost and fog, along with below-normal temperatures and spells of wintry precipitation, is slightly higher than usual, the UK's Met Office said on Wednesday.
Overall, current weather forecasts show that this winter could be colder than usual, especially in northern Europe.
Power prices could rise further next week as wind generation is expected to continue to be low in Germany and France.
The benchmark gas prices at the Dutch hub Title Transfer Facility (TTF) jumped earlier this week as the cold snap began, with prices settling on Tuesday at the highest level in six weeks.
Europe's power prices will not come off historically high levels anytime soon as the supply for all electricity generation sources is tight and likely to remain so in the medium term, Moody's said in a report last month. Power generation will be tight this winter, especially in northwestern Europe, due to the low availability of French nuclear power generation and lower hydroelectric supply, Moody's said.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More