European Power Prices Have Never Been This Volatile as War Rages
(Bloomberg) -- European power traders have never seen bigger price swings than right now.Â
The market is being whipsawed along with the cost of everything from coal to emission permits, as gas flows from Russia, the region's biggest supplier, are getting more uncertain by the day. The war is also impacting trading, with companies switching their portfolios of contracts to avoid exposure to Gazprom PJSC's trading unit and other Russian outfits.Â
In the past month, German month-ahead power has traded between 143 euros and 400 euros per megawatt-hour on the European Energy Exchange AG. The contract's 30-day volatility exceeded 200% for the first time this week, according to data compiled by Bloomberg.Â
Volatility was soaring even before Russia's war in Ukraine, fed by the region's worst energy crisis in decades. The market saw prices plunge in January after a December spike, before rebounding as the invasion upended markets.Â
A sustained period of volatility at these levels will rock the market even further, with dozens of traders and suppliers already forced to shut shop since last summer as they haven't been able to buy enough power in advance. It could also boost retail prices further since utilities need to account for the risk.Â
German month-ahead power on EEX is headed for its biggest weekly gain since at least 2017 after climbing 63% in the past four days.Â
©2022 Bloomberg L.P.
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