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    Key European power price doubles in two months as crisis deepens


    August 16, 2022 - The Peninsula Newspaper

     

      European power prices jumped to a fresh record as natural gas extended gains, deepening the energy crunch that's threatening to plunge the region into a recession.

      Next-year electricity rates in Germany advanced as much as 3.7% to 477.50 euros ($487) a megawatt-hour on the European Energy Exchange AG. That's almost six times as much as this time last year, with the price doubling in the past two months alone.

      The market is being driven by concerns over whether Europe's tight gas supplies will be able to generate enough electricity this winter. France's nuclear capacity is extremely low, denting the possibility of power exports in the months ahead.

      Day-ahead prices in Germany and the UK also set records Monday, an indicator of high demand for cooling, with heat waves and drought on the continent straining infrastructure in the short term.

      Rising energy prices are feeding through to household bills and the cost of everything from making food to heating glass.

      Energy is driving inflation across Europe, pushing consumer-price increases into double-digit territory.

      In the UK, the household energy price cap is set to almost double at the start of October on the back of rising wholesale costs. The wholesale price of UK electricity for that month has jumped about sevenfold in the past year to roughly £591 ($713) a megawatt-hour on the Intercontinental Exchange AG.

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      European governments are looking at measures on how to ease the pain and impact that soaring energy costs are having on economies. In France, the state plans to fully nationalize Electricite de France SA, the embattled nuclear power utility now struggling to keep its plants going in the blistering heat.

      There's no clear sign of the "extreme" price rally abating soon, Rystad Energy AS analyst Fabian Ronningen said. The continent's low nuclear, hydropower and coal capacities aren't enough to help ease that pressure, he said.

      Benchmark Dutch gas futures for next month extended last week's gain, climbing as much as 4.2% in Amsterdam. The price has more than doubled since June.

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