Europe’s Clean Energy Boom Cuts Forward Prices to Pre-Ukraine Invasion Levels

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A boom in clean power electricity generation has helped push Europe’s forward power prices to their lowest levels since before Russia’s invasion of Ukraine in 2022 severed natural gas pipeline flows and sent the region’s power prices surging.

Base wholesale fair value power prices in Germany and France, the region’s two largest economies, currently average around 102 and 105 euros per megawatt hour (MWh) respectively for the first quarter of 2024, according to LSEG.

Those forward value estimates are less than half the average wholesale power price seen in both countries in 2022, and forward markets indicate that prices look set to average below 105 Euros/MWH in both countries through the end of 2025.

While subject to change as market conditions evolve, those relatively low forward price curves should provide a boost to energy-intensive consumers who had been forced to cut back on power use due to high prices in recent years.

A major driver behind the subdued power price outlook has been the sharp rise in clean power capacity development across Europe in recent years, and widespread confidence that much further clean power development will emerge in the years ahead.

Clean power sources have generated a record 59.3% of Europe’s electricity through the first 10 months of 2023, and could surpass the 60% mark by year-end if wind generation picks up as usual in December, data from Ember shows.

Source : Reuters