European electricity tariffs rose further last week and the record from July was beaten in Italy, France, Germany and the UK.
Italy was the first market ever to register a monthly spot price above €500 ($500.15) per megawatt hour, as the average for August climbed to €547 per MWh, the Oslo-based global energy research company said in a report on Wednesday.
France was close to edging past the €500 mark, averaging €492 per MWh, followed by Germany at €465 per MWh and the UK at €438 per MWh.
“Germany and the UK were also the countries that saw the largest increase last month, with a 48 per cent and 53 per cent increase, respectively. The increase was in the range of 20 per cent in both France and Italy,” said senior Rystad analyst Fabian Ronningen.
“This [sharp increase] had the effect of closing some of the gap in prices seen earlier in the year, especially the gap between French and German prices [which] closed significantly.”
Italy, France and the UK all averaging above €600 per MWh last week, a record seven-day high.
“The first few days of week 35 [of this year] are not looking better, with fresh daily records. On Monday, France recorded an eye-watering €744 [per MWh] as the daily average price in the spot market [hit] a new record as well,” Mr Ronningen said.
Gas prices in European markets have risen steeply after a reduction in flows from Russia through the Nord Stream 1, exacerbating the region's energy woes.
On Wednesday, Russia's Gazprom completely shut the pipeline to carry out maintenance work and it said it would reopen on September 3.
Rystad said a surge in gas prices to a record over the past week is mainly to blame for the significant increase in energy prices across Europe that is driving inflation and threatening to push the bloc into recession.
The energy futures market has also been incredibly volatile, with German and French front-year trading above €1,000 on Monday, a first for Germany, Rystad said.
However, the downward price movement since then has been extreme as well. On Tuesday, German futures closed 41 per cent lower since the intraday peak on Monday, driven by a similar movement in the gas market.
Benchmark Dutch futures for October fell as much as 13 per cent on Wednesday and settled 9.6 per cent lower amid thin volumes and volatile trading.
With little respite on the horizon, European nations are bracing for a hard winter and policymakers are now considering market intervention to curb prices and protect consumers and businesses.
“It is still not clear what market design will be selected, but both an electricity price cap and a gas price cap are on the table,” Mr Ronningen said.
“One of the key issues targeted to be solved is to decouple the gas and electricity market, and it is not obvious how this should be done most effectively in a liberalised electricity market like the European one.”
With gas supplies from the US, the EU has met its goal to fill storage two months before target, providing some relief after last week’s rally. However, concerns remain that Russia may clamp down further on gas exports to the continent.
Russia’s Gazprom, earlier this week, said it will stop gas supplies to French energy company Engie over payment issues, a move which increases the risk of a widening supply gap.
EU countries are also taking several steps to reduce the use of gas, both through an overall regional agreement and more specific measures by individual countries and companies, Rystad said earlier this month.
The bloc's plan to reduce gas consumption by 15 per cent between August and March came into effect as it prepares for the winter months.
The final package is a compromise in which the cuts are initially voluntary and could become mandatory if enough countries request them. A number of members, including island states, can claim exemptions.