The Kremlin’s predictions about Europe’s “catastrophic” energy problems have not come true.
The threats of the Russian authorities, who promised sky-high prices for gas and electricity to Europe last summer and even frightened entire European cities by freezing, did not materialize at all. The wholesale cost of electricity in the Netherlands has not only fallen significantly, but has collapsed to negative values..
According to Bloombergon Wednesday, April 19, on the Amsterdam Epex Spot stock exchange, the price of a contract with delivery on the next day sank to -739.96 euros / MWh.
The next day, every hour in the interval from 10:00 to 17:00, the weighted average price was also negative.
The reason for such a sharp drop in the cost of electricity – excess production at wind farms that have exceeded aggregate demand. As a result, networks began to pay extra to customers for additional consumption.
Enappsys said that due to low demand in the Netherlands and neighboring countries, the network was flooded with 16 GW of clean electricity. It also failed to redirect large volumes of this electricity for export.
In such circumstances, it was possible to start trading only on the second attempt, since at the first auction traders were unable to set prices.
As you know, the cost of electricity is highly dependent on the price of gas. If last year electricity prices in Europe were high due to the increase in prices for “blue fuel” caused by the reduction in supplies to the Russian “Gazprom”. The leadership of the Russian company threatened Europe that the price of gas in winter could reach $4,000 per thousand cubic meters. Russian President Vladimir Putin also frightened the Europeans with high gas prices.
However, in the last two months, gas in Europe has been trading at $460-570 per 1,000 cubic meters (€40-50/MWh), which has led to lower electricity prices. This was due to the influx of LNG, accelerating the transition to renewable energy and improving energy efficiency.
Recall that after the loss of the European market, Russia is forced to sell gas to China at huge discounts. For example, in the second quarter of 2022, gas was sold to the Chinese side at $250 per thousand cubic meters, while fuel cost about $1,000 on European exchanges.
Earlier, the Russian government confirmed the fall in oil and gas revenues against the backdrop of reduced exports to Europe.
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