The Strategist

Rystad: Abnormal heat pushes electricity prices in Europe to new highs

07/21/2022 - 04:06

Rystad Energy analysts claim that unusual temperatures in numerous European nations are driving electricity costs to new all-time highs.

According to industry analyst Fabian Rønningen, "a perfect storm of soaring gas costs due by supply concerns from Russia, high coal prices, poor wind speeds, and sweltering temperatures is pushing European spot power rates to record highs."

He specifically mentioned how July is currently expected to surpass February as the costliest month for Germany, France, and Italy.

The highest average spot price this year, at €426 per MWh, was noted last week in Italy, followed by €373 in France and €314 in Germany, according to Rystad.

The markets, which have been extremely tight for almost a year, were hoping for a summer break, but the exact opposite happened, he added.

The U.K. electrical system, which recorded its warmest day on record on July 19, has also been significantly impacted by the unusual heatwave in recent weeks.

The expert pointed out that because of the increased need for cooling caused by such high temperatures, the electricity system is under more stress.