(Bloomberg) --
Germany and the rest of Europe are bracing for an expensive winter as power contracts for the next couple of months climb to unprecedented highs because of tight supplies of gas and coal.
September power prices on the German day-ahead market averaged the highest in at least 20 years as surging gas, coal and carbon costs make it more expensive to generate electricity at the nation’s fleet of fossil-fired plants. Yet traders expect the charges to increase even more this winter with the benchmark Dutch gas contract crossing the key level of 100 euros last week and a fierce global struggle to secure coal supplies continuing.
“An enormous price jump on especially the European coal market, with gas and carbon climbing as well, led to further gains on the German power market,” Energi Danmark, an energy trading company, said in a note on its website. “Prices have jumped to extreme highs over the last few weeks.”
The contract for November traded above 200 euros per megawatt-hour Monday, the first time for a German month ahead contract. With signs that some coal plants already are low on supplies, contracts for January and February are trading even higher. German power for next year also rose to a record of 141.24 euros.
For more on the global energy crunch from BNEF, click here
A sudden boost of wind output Sunday morning brought hourly power prices down below zero across Europe, showing that renewable generation also will have a say in prices this winter. Hourly prices ranged from -2.02 euros to 153.84 euros within the same day, based on the wind speed.
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