Extreme heat, bullish fuels drive European power price surge

Chetan Patel


LONDON (ICIS)–Heatwaves and below-average wind generation have combined with high fuel costs to send the price of electricity across Europe soaring.

Unseasonable weather has compounded already bullish energy prices on the back of tight global gas fundamentals, with markets struggling to meet demand with supply.

A confluence of bullish factors led by gas have buoyed spot power across regions, with most Day-ahead prices settling in three-digits on 10 and 11 August during peak demand hours.

EPEX spot Day-ahead outturns:

– France: Tuesday €/99.17MWh, Wednesday €104.94/MWh

– Germany: Tuesday €/100.76MWh, Wednesday €106.54/MWh

– Netherlands: Tuesday €100.22/MWh, Wednesday €106.00/MWh

– UK: Tuesday £106.52/MWh, Wednesday £103.55/MWh

Strong upside was supported by European gas Day-ahead contracts flirting yet again with multi-year highs on Tuesday as markets adjusted to further gas supply restrictions.

According to recent ICIS analysis , key European energy commodities are locked into their most extreme bull-run on record with winter risk premium piling on gains to the front-end of the curve.

Regional weather-related fundamentals have intensified this upside risk, with particular consequence for Spanish and Greek power.


Heatwaves in southern and southeastern Europe have rocketed demand for power from air conditioning, while below-average wind generation has kept demand for gas high in the power sector.

Spain has been one of the hardest hit markets, with spot power prices in the country doubling since the start of the year.

The average daily spot price in July hit €93.50/MWh according to OMIE, three times higher than prices in the same month last year. The trend has continued in August, with seven of 11 sessions settling above €100/MWh and the last three sessions breaking the historical high consecutively.

One Spanish trader said he expects prices to continue testing new highs as temperatures rise still further.

“Increasing gas and carbon prices amid low wind generation are the key reasons for the record prices,” he said.

“Prices will most likely continue to rise in coming days due to increased demand with a heat wave that begins on Thursday and will bring temperatures around 47ºC,” the trader added.

The trader also said: “You have to go to the futures of 2025 and 2026 to find prices lower than those seen in April.”


Heatwaves have also ravaged parts of southeastern Europe, with scorching conditions driving demand for cooling higher amid outages at nuclear and gas plants unable to operate in the heat.

Front-month Greek power prices have surged past €100/MWh for the first time according to ICIS records. The Greek baseload front-month settled at €114/MWh, a 78% increase against the start of the year.

In addition to weather driven demand and bullish fuel costs, power prices have been lifted by restricted cross-border capacity.


With several factors at play, prices are likely to continue to test new all-time highs in the coming sessions.

Some respite will be offered to certain regions, like Greece for example, when its electricity interconnector with Italy returns.

At the same time, bullish momentum is not looking to ease. The ICIS TTF front-month pushed past €45.00/MWh on Wednesday morning. The increase in gas prices has shuffled the merit order, with some coal plants pushing gas plants out of the generation mix, further supporting the surge in electricity prices.


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