Gas-fired generation has surged across Europe as soaring temperatures and weaker wind output increase electricity demand and place additional pressure on the power system. The latest market developments highlight the continuing importance of flexible gas-fired power during periods of renewable shortfall.
Scorching temperatures of above 40°C are driving up cooling needs across all Europe, which in turn is increasing electricity demand. Meanwhile, French nuclear is running lower amid high river temperatures and unplanned outages.
And, very importantly, wind power output is down by almost 40%, at a time when electricity demand is over the roof. There seems to be a link amid heatwaves and wind lulls.
Not surprisingly, electricity prices surged across all Europe and hit an all-time high of over €1,000/MWh in Belgium earlier this week, highlighting the stress on the electricity system.
In this context, flexible gas-fired power plants are once again doing the heavy lifting, with their output doubling in just a few days to meet higher demand and offset lower wind and nuclear generation.
What is your view? What will be the impact of summer heatwaves on gas demand? How will the Super El Niño play out? And what does it mean for prices?
Source: Greg Molnár, LinkedIn
