Storm Isha’s early influence leads to a downturn in prices

In the third week of January 2024, Northwest Europe experienced temperatures consistently below the seasonal average. Concurrently, wind energy production in the mainland was notably higher than in the preceding week. This increase in wind generation, especially significant during the weekend, was primarily due to storm Isha, which brought substantial wind activity to the Northwest European region. As a result, there was a marked reduction in power prices over the weekend.
Although windy conditions developed in the weekend, gas and coal-fired power plants still were the primary sources of electricity generation for the majority of hours and particularly remained dominant during the weekdays. The weekly average spot electricity price in the Netherlands was at €82,1/MWh, around €14 lower than the week before. Correspondingly, the weekly average day-ahead gas price also fell, decreasing by about €2 to €29,5/MWh.
In the initial weeks of 2024, namely weeks 2 and 3, the region experienced less wind and colder weather. However, recent weather forecasts predict a shift, with a resurgence of wind and temperatures expected to be above the seasonal norm for the remaining days of the month. The TTF February and March 2024 contracts closed at €28,4/MWh and €28,5/MWh, respectively, showing a decline of approximately €3,5.
The prices of CO2 allowances continued their downward trend, decreasing by €2,2 to close the week at €63,6/MWh. This decline in CO2 and gas prices has also led to a reduction in future power prices. For instance, the Dutch power contract for February 2024 fell by nearly €10 to €74/MWh, and the contract for March closed €9 lower at €66,8/MWh. The clean spark spread for February turned more negative, dropping by almost €2 to -€2.9/MWh.

TTF 2025 gas price decreased by almost €2 to €32,5/MWh. Similarly, the price for CO2 allowances decreased by €2, settling at €65,9/EUA. The Dutch power contract for 2025 dropped by about €6 and closed at €79,7/MWh. Furthermore, the clean spark spread for the year decreased to -€5,8/MWh, while the clean dark spread dropped by €2,3 and closed at -10,8 €/MWh.