Electricity prices in Europe surged in December 2024, driven by a mix of low renewable energy output, rising demand due to cold weather, and market volatility.
⚡ Key Price Trends in December
According to Ember, monthly average wholesale day-ahead prices in Europe varied:
Italy: €135.11/MWh (+3.2% m/m)
Spain: €111.25/MWh (+6.4%)
France: €98.21/MWh (-2.3%)
Germany: €105.82/MWh (-5.2%)
Sweden: €44.61/MWh (-15.9%)
The first two weeks of December saw significant price spikes, with daily rates exceeding €120/MWh across most countries. On December 12, Germany recorded €1000/MWh in intraday trading, the highest in 18 years, due to "Dunkelflaute" (low wind and solar production combined with high demand).
🏭 Impact on Industry and Supply Chains
The price surge disrupted industries reliant on electricity spot markets. For example, Germany's Feralpi Stahl steel plant paused operations to avoid excessive costs, impacting annual output. Norway, a key electricity supplier to Germany, also saw record-high prices, reaching 13.16 NOK/kWh on December 12 – nearly 20 times the previous week's rate.
🔵 🟡 Ukraine’s Energy Market Update
Ukraine’s weighted average price on the day-ahead market rose 7.1% m/m to €136.4/MWh. Electricity imports increased 2.6 times from November to 430,000 MWh, with Hungary accounting for the largest share (39%). However, rising transmission tariffs for 2025, up 30%, have drawn criticism for threatening industrial competitiveness amid ongoing war conditions.
🚨 Gas Reserves and Supply Concerns
As of January 2025, European gas storage levels dropped to 71.8%, compared to 86.1% a year earlier. Reduced reserves and the cessation of Russian gas transit on January 1 have exacerbated volatility. Dutch TTF futures hit €51/MWh on January 1 before stabilizing, reflecting supply pressures.
👓 Outlook for 2025
Eurelectric predicts moderate demand growth (1.6%) for 2025, driven by electrification in sectors like data centers, heat pumps, and EVs. Renewable energy (solar and wind) is expected to expand generation capacity, though nuclear power output may decline, particularly in Belgium and France.
While renewable energy shows promise, Europe faces persistent challenges from market instability, rising costs, and geopolitical tensions impacting energy security.
👁️🗨️ Source: Halina Yermolenko, Jan 15, 2025- https://lnkd.in/dtcE4FJZ
