German power for next month fell for a third day, dropping as much as 8.2%, as Dutch gas extended its bearish streak this week. Warmer weather in central Europe as well as forecasts for higher wind output in the coming days are also damping the risk of further price spikes, at least for now.
“It’s the gas prices pushing directly on power,” said Bengt Longva, an analyst with StormGeo-Nena AS in Oslo. “That’s the most important driver today.”
The slide in prices over the past few days will offer relief to energy intensive companies and many millions of homes across the region, who have seen their bills skyrocket since the autumn. While month-ahead prices in Europe’s biggest economy have dropped by about 50% since a December peak, they are still about four times higher than a year ago.
Next-month gas prices dropped for a third day, before recovering to trade little changed. A wave of LNG will boost supplies at a time when storage levels are at their lowest at more than a decade for this time of year.
European Gas Extends Drop as LNG Tanker Armada Brings Relief
German month-ahead power was down 5% to 218.20 euros per megawatt-hour at 12:55 p.m. in Berlin. The French contract dropped 10% to 287 euros.
Despite prices easing, the French government is stepping up pressure on state-owned Electricite de France SA to ramp up nuclear output, also a key driver of power prices in northwest Europe. The country’s nuclear fleet was operating at 79% of full capacity on Tuesday, according to grid data compiled by Bloomberg. It was as low as 71% on Dec. 20.
Still, the country has “too many” nuclear reactors offline, Ecology Minister Barbara Pompili said on Tuesday morning as the government was trying to take more control of the crisis.
“Now it seems France has at least some control over nuclear availability,” said Longva. That’s a “big difference” from a few weeks ago, he said. That will also help save some water in the reservoirs, he said. Hydro power is another important source of electricity in France.