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Year-ahead electricity prices continue to soar in Europe, with German power prices, the European benchmark, jumping to over $508 (500 euro) per megawatt-hour on Tuesday amid low Russian gas supply and a heatwave constraining supply and output from other fuel sources.
Over the past year, German power prices have soared by around 500%, according to Bloomberg’s estimates.
Power prices in France and the Nordic countries also hit fresh records at the start of this week as nuclear power generation in France is lower than usual, while water reservoirs for hydropower in Norway and the other Scandinavian countries are suffering from low levels during the heatwaves.
Power prices in Germany have been rallying this month, setting new records nearly every day. Just two weeks ago, the record price was $416 (410 euro) a megawatt-hour (MWh), but this has now been obliterated by the 500 euro/ MWh year-ahead price.
Utilities in Germany have warned that some coal-fired power plants could see irregular operations until the first week of September because of limited coal supply due to low water levels on the Rhine—Europe’s key fuel transportation corridor—which complicates the transportation of coal via barges. The hot and dry weather in Germany is expected to continue for weeks, which could see German and European power prices climb even higher ahead of the winter if utilities continue to limit power generation.
Meanwhile, French authorities allowed last week five nuclear power plants in France to continue operations and discharge hot water into rivers even during another heatwave as the country looks to keep its electricity generation stable and conserve natural gas for the coming winter.
Further north, Norway may soon introduce a rule to reduce its vast electricity exports if levels at reservoirs for hydropower generation drop to critically low levels to prevent power shortages and further rises in energy bills domestically.
Households and industries in Europe are bracing for a difficult winter with skyrocketing energy bills and costs, and industrial sectors – including major industries in Germany – have warned that they will curtail production due to high energy costs.
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.