Recession fears have been driving…
Crude prices rose on Wednesday…
High natural gas prices and low wind speeds have created a perfect storm for the day-ahead power prices in the UK, which hit a new record on Wednesday, beating the one set earlier this week.
Natural gas still accounts for around 30 percent of the UK’s power generation, and with gas prices surging in recent weeks, power prices have also shot up. In addition, low wind speeds are making wind power generation less efficient, further straining the power supply.
With surging natural gas prices and warm and still weather in the UK in recent days, the country fired up on Monday an old coal plant that was on standby in order to meet its electricity demand, the BBC reports.
The UK has pledged to phase out coal-fired power generation by October 2024.
Coal provided 3 percent of the UK’s power on Monday, compared to 2 percent averages in recent months.
The UK has relied on some coal-fired power generation every day since mid-August, when there was a three-day run of coal-free electricity supply, a spokesman for National Grid ESO told the BBC.
The UK, as well as the rest of Europe, are bracing for further spikes in power prices when the heating season begins. The natural gas levels in storage in Europe are significantly below normal because of a cold snap in the spring and surging prices of natural gas amid lower shipments from Gazprom and soaring prices for liquefied natural gas (LNG).
For European consumers, energy prices are a pain point, and this year’s surging prices feed into inflation and the cost of goods.
In Germany, Europe’s biggest economy, higher energy prices pushed the annual inflation to a 13-year high in August, as household energy, motor fuels, and food prices jumped. Spain also saw a jump in inflation to the highest in several years due to surging electricity prices.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com