Rock-bottom Nordic power prices this weekend won’t benefit the UK as France mops up flows to ease a supply crunch.
(Bloomberg) — Rock-bottom Nordic power prices this weekend won’t benefit the UK as France mops up flows to ease a supply crunch.
Britain is set to import cheap electricity from Norway, Belgium and the Netherlands on Saturday, which would usually lead to lower prices. But a heatwave is boosting demand in France and drawing supplies, which means the UK will pass on the power there rather than using it at home.
Short-term UK power prices are at the highest for a Saturday since April, while those in the Nordics are close to zero.
“The high prices in France means the UK is, in effect, passing on cheaper imports of power from the Nordics, Netherlands and Belgium, leaving gas to set the price in the UK still,” said Adam Lewis, a partner a Hartree Partners Ltd.
UK gas prices are up about 50% this year as Russia restricts supplies to Europe, raising power costs on the continent. The UK’s National Grid Plc is looking for ways to conserve energy, including asking industries to use gas voluntarily and businesses to adopt contracts to cut power usage if needed. Energy exports could become controversial and test Europe’s unity if the crisis deepens in winter.
France sticks out as the country with Europe’s highest power prices as going problems with Electricite de France SA’s nuclear fleet curb supply. Historically a reliable exporter, France is now likely to need to import from countries connected to its grid this winter.
In the UK, the government wants to sever the influence that gas has on power costs. One idea being discussed is a cap on gas prices, with options set to be presented this summer.
Average Saturday power prices in the Nordic region slumped to 4.17 euros ($4.24) a megawatt-hour, the lowest since November 2020. The 81% drop from Friday is due to lower demand as people there take summer vacations earlier than elsewhere in Europe, good wind power and and plenty of water in reservoirs in Norway and Sweden.
A heatwave that’s building in Germany and France will push temperatures above 28 degrees Celsius (82.4 degrees Fahrenheit) in Paris on Saturday, before rising to 33.5 Celsius next week. That will boost demand for cooling.