Germany activates lignite reserve again

Last week began with very little wind energy production, which made gas-fired power plants the marginal plants for most of the day in both the Netherlands and Germany on Monday. Tuesday was a public holiday in Germany, leading to lower overall power consumption. At the same time, we saw a significant increase in wind production in Northwest Europe, resulting in significant price differences between countries like the Netherlands and Germany. On average, the Netherlands was nearly €45 more expensive than Germany. Wind power remained dominant until Saturday, generally putting downward pressure on prices. The average spot price was 82.6 €/MWh, about €20 lower than the previous week. Additionally, the day-ahead gas price dropped significantly throughout the week, averaging €31.4/MWh compared to 40 €/MWh the previous week.

For the coming months, gas prices decreased relatively less. November dropped by €4 and settled at 38.2 €/MWh. December dropped by almost €3 to 42.9 €/MWh.

CO2 prices remained relatively stable but became slightly cheaper. The contract for December 2023 decreased by one euro to 80.5 €/EUA.

Dutch power forward prices also declined. November became around €12 cheaper, falling to 98.7 €/MWh. December decreased by over €5 to 109 €/MWh. The clean spark spread for November decreased to -3 €/MWh.

The German government has approved the temporary return of approximately 2 GW of lignite power plants to the electricity market. These lignite reserves were allowed to operate from October of last year until the end of June of this year in order to save gas, among other reasons. It’s worth noting that at the beginning of June, the German Minister of Economic Affairs and Climate had stated that these lignite power plants would probably be necessary for the coming winter. The lignite power plants from the reserve are now allowed to operate until the end of March 2024.

For 2024, gas became slightly cheaper, decreasing by €2 to 45.3 €/MWh. CO2 became one euro cheaper and closed at 84.5 €/EUA. The Dutch CAL-24 contract became nearly €6 cheaper, closing at 112.1 €/MWh. The clean spark spread for next year fell by 1 euro and was -€4.5/MWh.

Weekly changes