Record Winds Cause Energy Prices to Fall in Europe
Electricity prices across Europe dropped last month as mild temperatures, strong winds and stormy weather produced wind power records in Germany, France and the UK, according to data released by Platts.
The Platts Continental Power Index (CONTI) fell 0.4% in December 2013 to €46.80 per Megawatt hour (/MWh) compared to the November 2013 rate of €47.00/MWh, when calmer winds and colder temperatures suppressed wind power and boosted electricity prices. Year-over-year the index was up 8.8%.
The price decline was more marked in Germany, where the average day-ahead baseload price in December fell 10% month over month to €35.71/MWh. On a daily basis, December was a month of extremes for Germany, with day-ahead base prices closing on December 10 and 11 at less than €60/MWh — the highest over-the-counter levels seen all year — only to fall to its lowest level December 24 to €0.50/MWh.
"Last month's European power prices demonstrate growing price volatility observed in the winter months due to the capricious nature of the wind," said Henry Edwardes-Evans, Platts associate editorial director of Power in Europe.
"When wind power generation drops, Europe's power system often falls back on expensive natural gas-fired generators, and prices rally. When the wind blows, prices can actually turn negative as wind operators continue to feed subsidized power into the grid, despite the market signal."
"The overall effect has been volatile but generally lower wholesale power prices," Edwardes-Evans said. "The average CONTI Index price for 2013 was €43.34/MWh, down 13% from 2012's €50.00/MWh."
In the UK, day-ahead baseload power prices were stable in December on a month over month basis, but were up 6.5% year over year. With only two cable interconnections to France and the Netherlands, the UK's exposure to mainland European power surpluses is limited, and U.K. power prices have been significantly higher than in other northwest European markets.
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Wind turbine image via Shutterstock.