The heat wave in Europe has once again driven up electricity prices
Abnormally high temperatures in late June caused a sharp rise in electricity prices on European energy exchanges. Meteorologists predict that a new heat wave in July could keep prices high.
The sharp rise in prices is driven by a simultaneous increase in demand for cooling and a shortage of supply in the market.
The current situation has clearly demonstrated how extreme heat linked to climate change can disrupt the stability of electricity markets on a large scale.
New Temperature Threats
Weather forecasts indicate an increased risk of new heat waves in the United Kingdom, Spain, Germany, and France as early as this month.
The upcoming period of hot weather is unlikely to fully replicate June’s extreme records, but temperatures across most of Europe will still exceed seasonal norms by 2–8 degrees Celsius.
Against this backdrop, futures for the German contract for next month’s delivery rose 2.2% on the Epex exchange to 103.58 euros per megawatt-hour, approaching the January high.
June’s record-breaking temperatures significantly worsened electricity supply conditions due to a drop in wind power generation and capacity restrictions at gas-fired power plants.
In addition, due to excessively warm cooling water, power producers were forced to reduce output at nuclear power plants in France and Switzerland.
As a result of these factors, average day-ahead prices in Germany and the United Kingdom jumped last month to 109.50 euros and 115.76 euros per megawatt-hour, respectively.
For June, these are the highest figures since 2022, while in France, the cost of electricity reached its highest level since 2023.
Analysts at the London Stock Exchange warn that another heat wave will place a similarly heavy strain on the European power grid.
This is reported with reference to a Bloomberg article.
The heat continues in Ukraine, with rain and thunderstorms possible in some areas.
Earlier, the Ukrainian Hydrometeorological Center provided a forecast of what the weather might be like in Ukraine in July.
The abnormal heat in Europe has led to at least 18 deaths.
France has faced power outages amid a record-breaking heat wave that has swept across much of Western Europe. Several regions have reported power outages, as well as the imposition of emergency restrictions and the temporary closure of educational institutions.
