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European electricity prices are swinging wildly from daytime to evening as the Iran war’s disruption to gas supplies accentuates growing volatility in Europe’s power markets amid the rise of renewables. Wholesale prices in markets such as the Netherlands, Denmark and Germany are rising and falling by hundreds of euros per megawatt hour over the course of an afternoon, data from Montel Analytics shows, as abundant electricity from solar panels is replaced by gas-fired power as the sun goes down.
Prices then slump again as the evening peak passes. On March 4, day-ahead prices in Denmark swung from €26 per MWh at 2pm to almost €430 at 5.45pm, less than four hours later. Prices in the Netherlands jumped from €24 to €450 over the same period, with similarly large swings in Belgium and Germany. European wholesale prices have become more volatile in recent years due to the growth of intermittent renewable power, which means low prices when it is windy and sunny and higher prices when fossil fuels are needed to meet demand.
The trend has been accentuated this week due to the disruption to Middle Eastern gas supplies, which has pushed up the costs of gas for power stations. “We’re seeing very low or negative prices in the afternoon as solar power pushes gas out,” said Jean-Paul Harreman, director at Montel. “And then in the evening, gas has to start, but at those higher prices [due to the Iran war]. So you’re seeing these massive price swings.”
The gap between prices was likely to widen as spring approaches and solar output increases, he noted, and should be positive for owners of storage assets such as batteries. “For people with a flexible asset, this is brilliant news.”