European Power Prices Smash Records in Another Inflation Blow

(Bloomberg) — Power prices for Wednesday soared to records around Europe, heaping further pressure on governments to accelerate plans for how to shield households from devastating bills and rising inflation.

Most Read from Bloomberg

Fresh highs are becoming a nearly daily occurrence for Europe’s power markets, with prices now many times higher than the average for the past few years as the energy crisis is only getting worse. The latest jump comes as wind power is forecast at extremely low levels throughout the region, leaving grids more reliant on expensive fossil fuels.

Wednesday rates rose to records in the UK, France, Germany, Italy and the Nordic region. In France, where traders are paying the most, the day-ahead contract gained 5.5% to 645.54 euros ($640.83) a megawatt-hour on the Epex Spot SE in Paris. That’s more than seven times higher than a year ago, when prices had already risen far above the longer-term average.

Natural gas prices are currently the biggest driver for European electricity, and futures have surged as Russian exports dwindled in the aftermath of the nation’s invasion of Ukraine. That means any additional stress, such as a drop in wind or extreme heat that boosts demand, can push up prices even further.

France is in a particularly dire situation. The country relies on its fleet of nuclear power plants for most of its electricity. Availability dropped to as low as 43% early Tuesday, leaving the country more dependent on imports from neighbors like Germany where fossil fuels make up a greater portion of the supply.

Most Read from Bloomberg Businessweek

©2022 Bloomberg L.P.