While the gas market is stable, the electricity price is on the high side. In the gas market, especially the full surcharges ensure a stable market. Meanwhile, the low wind power leads to expensive electricity.
The gas market is currently quite stable. On Tuesday, June 18, gas was traded for €34.70 per megawatt-hour. A day later, the gas price reached the highest point of the week. On Wednesday, June 19, the gas price rose to €35.34. Then the gas price decreased. On Friday, June 21, the price reached the highest point of the week. On that day, gas was traded for €33.94.
The gas market remains fairly stable due to substantial reserves. In total, the gas reserves are filled to 74%. Although the filling of the reserves is not progressing rapidly, this level is unusually high. The reserves mask the fact that the supply of gas is still quite difficult. Since June 9, the filling rate of the gas reserves has only grown by 2 percentage points. This remains unusually slow.
LNG import decisive
Part of the slow filling process is still due to weak exports from Norway. Even more important is the low import of LNG. In recent months, the demand from Asia has been significant, as the demand for cooling electricity in Southeast Asia was high. In total, Asian exports decreased slightly, but in practice, the decrease is too small to really help Europe. Forecasts from the shipping data agency Kpler indicate that Asia is likely to import 23.18 million tons of LNG. This is a slight decrease compared to May. Compared to June 2023, the import is still 8.9% higher, compared to 21.28 million tons. This results in a slightly lower LNG price of $12.47 per mmBtu.
In most countries, a slight decrease in imports was observed. However, there is an exception, and that is the import from India. The country broke the record import from May of 2.46 million tons and imported 2.72 million tons of LNG. Due to severe heat waves, India needs additional gas to meet the electricity demand for air conditioning. Normally, the share of gas in the Indian electricity mix is 2%, as coal is responsible for 75% of all electricity in the country. In May, the share of gas increased to 3.1%, and it is expected to further increase. Additionally, LNG is used in India to produce fertilizers. In total, production increased by 7.8%.
New sanctions against Russia
Remarkably, given the challenging LNG market, the European Union has presented a sanction package against Russian LNG imports. Although the package is mainly a symbolic measure, as the LNG used to replenish the reserves is not included in the sanctions list. The sanction package prohibits investments in and exports to Russian LNG ports. Additionally, the package prohibits the transit of Russian LNG in European ports.
Soft wind leads to expensive electricity
The electricity price was higher this week than in previous weeks. On Tuesday, June 18, electricity was traded for €95.54 per megawatt-hour. That was the highest point of the week, although the price hardly deviated from it for most of the week. Over the weekend, the price was just above €50, with a low point on Saturday, June 22. That day, electricity was traded for €51.62 per megawatt-hour.
The higher electricity prices were mainly due to lower wind power. Last week, only 18.7% of all electricity was generated by wind turbines. As a result, only 51.9% of all electricity was generated almost for free. Last week, 64.2% of all electricity was still generated from renewable sources. Due to the low wind energy yields, the share of gas increased from 28.1% to 36.8%. This significantly increased the electricity price.
The difference was slightly offset by the resumption of electricity production at the Borsele nuclear power plant. Last week, the plant was shut down for maintenance. This week, the plant was back in operation, and 3.5% of the electricity was generated by nuclear energy.
Investing in energy storage
Furthermore, research by the AgriDirect research agency shows that about 10% of dairy farmers are interested in investing in energy storage. Over 75% of dairy farmers already have solar panels or wind turbines. To utilize electricity more efficiently, about 10% are interested in energy storage. However, the percentage of dairy farmers willing to invest in solar panels decreased. Last year, 22.5% of all dairy farmers were interested in solar panels. This year, the percentage decreased to 8.6%.
