Bloomberg: European electricity is heading for its most expensive year

Germany’s contract for next year, a benchmark for European electricity prices, has risen for a sixth straight meeting this year amid rising fuel costs as sanctions restrict Russian energy supplies, according to Bloomberg.

The contract is now being traded at the highest level since the market expected the complete cessation of Russian gas flows at the end of last year, while the contract for 2023 is at a record level. The market situation is expected to be very tight next year, as Russia plans to stop the flow of gas to more and more countries that refuse to pay in rubles, in addition to the complete ban on imports of Russian coal set for August by the European Join.

Europe is trying to boost its winter energy reserves to mitigate the worst effects. Coal reserves in northwestern ports have reached their highest level since October 2020 this month with more deliveries coming before the ban, while Russian gas flows continue to replenish storage levels, Sweco said. Gas storage levels in the EU are 46% full, the highest level since the beginning of the year and close to the 10-year seasonal average.

Efforts are being undermined by the growing list of European countries to which Russian company Gazprom will not send gas due to refusal to pay in rubles, with the Netherlands and Denmark being added to this list this week. With coal replenishment dependent on supplies mainly from the US, South Africa and Colombia, European coal prices are also rising, as “it is by no means certain that these countries will be able to maintain high exports “, said Energi Danmark.

German electricity for next year increased by 2.6% to 240 euros per megawatt-hour, the highest level recorded for the 2023 contract on the European Energy Exchange. Daily prices in Germany averaged 96.81 euros last year, the highest annual level recorded, and so far have averaged 179.40 euros this year.