Weekly Energy Market Highlights:
- European power prices spiked this week amid surging gas prices and the expectation that Russia will completely halt the gas flows to the continent.
- Russian gas flows through the Nord Stream 1 pipeline to Germany were reduced to 60% capacity. Additionally, the annual maintenance of Nord Stream 1 is set to start on the 11th of July and until the 21st of July. This news triggers a very bullish market sentiment.
- Nevertheless, the gas stocks in Europe continued to recover to 55% capacity this week amid strong LNG gas flows from the USA and Qatar.
- Germany will restart coal-fired power plants and offer incentives for companies to curb natural gas consumption in order to reduce its reliance on gas power generation.
- The Netherlands is planning to lift all restrictions on fossil fuel power stations, which were previously limited to 1/3 of their output, to boost the power generation capacities in the country.
- Poland and Ukraine will connect their power systems by the end of this year, allowing the export and import of energy to Ukraine. At the same time, Russia has promised to continue gas shipments to Hungary while cutting the deliveries to the other EU markets.
- The EU is considering capping gas prices following the significant reduction of Russian gas flows to Europe. Spain and Portugal have already implemented this measure at the beginning of June resulting in a 30-40% drop in the day-ahead power market prices. You can read more about this measure in this article here.
To read the prior week’s European Energy Market Update, please follow the link here.