(Bloomberg) -- U.K. Electricity prices surged to 2,300 pounds ($3,180) a megawatt-hour as Ireland warned of a power shortfall that could lead to blackouts and the cost of power broke records in Spain, Germany and France.
Europe is facing an energy crunch as supplies of natural gas remain below what's needed to satisfy demand. Any unexpected disruption in electricity supply like a power plant shutting off or a sudden drop in the wind can send already volatile prices even higher, heightening the pain for consumers as the winter heating season approaches.
Ireland, which usually exports wind power to the U.K., is facing acute supply shortages and issued an amber warning earlier Thursday signaling that the country could face blackouts. The Moyle interconnector, which sends electricity across the Irish Sea from Northern Ireland to Scotland, was halted to prevent exports.
Low wind on both sides of the Irish Sea as well as some unplanned outages have sent U.K. power prices soaring. In the intraday power market, there were 11 half-hour periods where the price cleared above 1,000 pounds from 11 a.m. to 6 p.m., with costs hitting a high of 2,300 pounds from 3 p.m. to 3:30 p.m. on Epex Spot SE.
The peak is more than 10 times higher the value at 8 a.m. Thursday, highlighting the extreme volatility in electricity markets that will likely get worse as demand increases with falling temperatures later in the year.
Record-high gas prices are being driven by tight supplies that likely won't ease much in Europe until a new pipeline from Russia begins operating. At the same time, the U.K. is seeing a dearth in wind speeds that would normally be providing more renewable power to the country's grid.
Prices continued to rise elsewhere in Europe as well, with Spanish day-ahead electricity gaining 7.5% to a record 152.32 euros a megawatt hour. France's benchmark power price for delivery next year rose 2.2% to a record 99.50 euros a megawatt hour and a record 96.10 euros in Germany.
U.K.'s National Grid Plc has asked Electricite de France SA to prepare two units at its West Burton B gas-fired power plant in case they are needed. Both facilities are offering their services at around 4,000 pounds, so this will be an expensive option.
The imbalance price was at 1,500 pounds a megawatt-hour at 11 a.m., that's the cost generators have to pay if they have an unplanned outage or can't deliver on the power they agreed to send to the grid.
EDF's Heysham nuclear plant is delayed, while two Drax Group Plc units and the south Humber facility are also experiencing unexpected outages.
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