ENTSO-E warns of the impact of oversupply of renewable energy

Nearly all traded products dropped in price last week. Gas became about €2 cheaper, falling to around €34/MWh. CO₂ closed €1 lower at €70.4/EUA. Coal also dropped slightly in price: June closed nearly €4 lower at €83.2/ton. The decline in commodity prices naturally translated into lower prices for Dutch power. Forwards for July and August both fell by nearly €7, closing at €72.4 and €74.4/MWh respectively. The June contract ended the month nearly €8 lower at €65.8/MWh. The clean spark spread for June ultimately traded around -€24/MWh.

The spot market was characterized by consistently strong wind generation. The month of May saw a noticeable increase in wind output, especially compared to previous months. The average spot price was €60.1/MWh. On Saturday, it became clear that many conventional plants were dealing with high startup costs, pushing prices toward €200/MWh in the evening. The spread with Germany was virtually flat.

Last Wednesday, German Chancellor Merz announced that Germany will do everything possible to ensure that the Nord Stream 2 gas pipeline will never be brought into use. Following reports about peace negotiations between Ukraine and Russia, speculation arose over the potential activation of the pipeline to resume gas imports from Russia. However, the likelihood of that happening appears slim.