Coal Overtakes Gas in the Merit Order as Gas Prices Rise

Dutch day-ahead baseload prices eased in Week 30, averaging €107.9/MWh, down €4.7/MWh week-on-week. Peak power fell more sharply, averaging €61.6/MWh, a drop of €15.4/MWh. The baseload decline can be attributed mainly to temperatures dropping compared to the previous week to slightly below normal, with lower cooling demand helping to suppress prices modestly. The sharper decline on peak was driven primarily by low prices during solar hours, which cleared at or near €0/MWh on the majority of days, reflecting broadly normal solar radiation across Northwest Europe. Notably, with TTF day-ahead prices elevated, gas marginal costs ran significantly higher than coal, giving coal plants a clear economic incentive to run — particularly during off-peak (night) hours, when Dutch prices were suppressed by imports from Germany, where coal plants were setting the marginal price.

Gas

TTF day-ahead prices extended their sharp rally in Week 30, averaging €60.8/MWh against €53.7/MWh in Week 29, up €7.1/MWh, as the US–Iran conflict escalated further and disrupted global LNG supply. The dominant driver, however, remained the deteriorating security situation around the Strait of Hormuz: with the US-Iran truce having broken down and Iran declaring the Strait closed indefinitely, transit through the waterway has remained severely constrained, and QatarEnergy is now preparing to extend its LNG force majeure through mid-October — a move that would take the disruption to Europe well into a seventh month, with 24 cargoes (roughly 3 bcm) already cancelled to Italy’s Edison alone since March.