(Bloomberg) -- German power prices rose to their highest in more than a year on a forecast for plunging temperatures and a drop in renewable energy output.
Next-month futures in Europe’s biggest economy surged as much as 4.4% on Monday to the highest level since October last year. The equivalent contract in France rose 4.3%.
After a relatively mild autumn, winter weather is set to arrive on most of the continent, pushing up demand for both electricity and natural gas. Bloomberg’s weather model shows that it will be even colder than previously expected for the next week or so. Further out, the temperature in Berlin is expected to drop below 1C (34F) on Dec. 3, compared with an earlier forecast of almost 3C.
Estimates for wind power output in Germany have also been revised down for most of this week, although production is expected to pick up again toward the end of the month.
Colder weather also means that utilities and traders are withdrawing more natural gas from storage sites, which is pushing up prices for the fuel. Futures are near their highest level in more than a year amid uncertainty over flows from Russia.
German month-ahead power rose 3.1% to €108 per megawatt-hour on the European Energy Exchange AG. The French contract was trading at €101.5.
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