Europe's energy market feels strain during cold snap

UK electricity prices soar as snow falls and wind fails to blow

Snow-blanketed power cables and railway tracks in Shenfield, near London. Bloomberg
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Europe’s energy market was feeling the strain of a cold snap on Monday as electricity prices surged.

As Britain was blanketed in snow, electricity traders paid an eye-watering £5,000 ($6,130) per megawatt hour for the peak of evening demand.

A more normal price would be in the hundreds.

As the wind failed to blow — what Germans call the “dark doldrums” — gas was producing more than half of Britain’s power.

Day-ahead prices for Tuesday were not at such extreme levels in Britain, but were set to rise again in Northern Europe.

The benchmark price on the Nord Pool exchange covering Norway, Sweden and others was poised to exceed €400 per MWh ($422) for Tuesday.

There was better news from France as the country’s nuclear power stations produced their highest output since March.

After months of maintenance problems in France, electricity company EDF announced no further cuts at the weekend.

The cold snap is set to continue for days as cold polar air blows in from the Arctic.

The UK’s forecast natural gas demand for Monday reached its highest level since February 2021, Bloomberg reported.

Two UK coal plants were told to warm up to prepare for an energy squeeze, although they were later stood down.

National Grid operators said there was “adequate available contingency for this evening”.

Monday evening will see the latest two-hour slot in which some UK customers can be rewarded for using less power.

Temperatures were as low as minus 5ºC in the north of Germany and amber warnings were in place for much of the country.

In Scotland, overnight temperatures this week could drop to minus 10ºC, Met Office forecaster Matthew Lehnert said.

“The cold conditions will remain in situ during this week. In many places daytime temperatures will struggle to get above freezing,” he said.

The weather puts Europe’s energy grid to the test after Russia drastically cut back its gas exports.

Many European leaders have urged people to save energy to make limited supplies go further.

A lobby group for Germany’s energy industry reported on Monday that gas savings since September amounted to 8 per cent when adjusted for temperature.

“Private households and small business customers are naturally using the heating in lower temperatures, but less,” said the group’s chairwoman Kerstin Andreae.

Updated: December 12, 2022, 4:45 PM