Power prices on European Energy Exchange hit new all-time high due to gas crisis

Power prices on the European Energy Exchange (EEX), based in the eastern German city of Leipzig, have reached a new all-time record level in day-ahead auctions of 553 euros per megawatt hour (MWh), price comparison website Check24 said. This equals a year-on-year rise of more than 850 percent, as the price on the same date in 2021 stood at  merely 58 euros per MWh. “High power prices at the exchange are also a result of rising gas prices,” Check24’s Steffen Suttner said. Gas power plants are “essential” for balancing intermittent renewable power feed-in within the German power mix, which is why the current gas supply crunch is spilling over into the electricity market, he said. “These high prices will ultimately also reach customers, although with some delay,” he added. Power prices for final customers only rose slightly in August, with a year-on-year increase of about 31 percent. This means that the average household that consumes 5,000 kilowatt hours of electricity per year will pay about 365 euros more. Wholesale gas prices have increased sevenfold since August last year, from less than 30 to 226 euros per MWh this year, Check24 added.

High energy prices have been a concern for households and businesses in the country since late 2021, when a pandemic recovery in many countries simultaneously triggered supply bottlenecks across the economy, which was then gravely exacerbated by Russia's attack on Ukraine. While the gas supply shortage currently absorbs most of the attention as the heating season draws nearer, high power prices could add to the concerns of consumers that increasingly try to wean themselves off of fossil fuels to replace them with electricity produced with renewables.