(Bloomberg) -- A dearth of windy days is helping push power prices across Europe to their highest in almost two years.
German contracts for delivery for delivery Wednesday settled at their highest level since December 2022 when stripping out an IT glitch that caused a spike in June. Contracts in the UK, Italy, Switzerland and the Netherlands all reached their highest level since at least January 2023 due to the low wind levels.
Germany Set for Tight Power Conditions as Wind Output Dips
The price spikes expose the challenges of an increasingly interdependent European energy system with large amounts of wind on the system. When wind levels drop, price spikes can be felt even in countries without a significant number of turbines.
Europe’s largest power markets have been affected by a string of windless periods this winter, putting pressure on prices and making countries burn more expensive fossil fuels. In addition, temperatures in northwest Europe are set to remain slightly below seasonal norms this week, pushing up heating demand.
On Tuesday, French power demand climbed to the highest since Jan. 20, adding to the tightness in the market. Almost two-fifths of French homes are heated using electricity, a relatively high share compared with other countries in the region.
The conditions mean Europe has been tapping into its gas storage at record rates, leading to worries about how the rest of the winter will pan out for supplies.
UK power prices settled at £175.05 per megawatt-hour for delivery Wednesday, the highest since January 2023, according to data from Epex Spot SE. The equivalent contract in Germany settled at €266.54 per megawatt-hour.
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