Electricity prices in Germany hit record high as utilities limit production

Electricity prices in Germany for the year ahead hit a record high on Friday after several European utilities warned of a drop in power supply due to hot, dry weather affecting production nuclear and coal-fired electricity.

Electricity prices in Europe’s biggest market, Germany, rose 2% early Friday to a record $419 (410 euros) per megawatt-hour (MWh), per Bloomberg estimates.

More utilities in Europe are looking to switch to fuels other than natural gas due to sky-high prices and Russian supply uncertainty as the continent scrambles to fill gas storage sites before Winter.

But coal supplies are limited due to low water levels on the Rhine, an important coal and fuel transport corridor in Europe.

Electricity prices were pushed higher on Friday by an announcement by Swiss company Axpo Holding, which is cutting output at the Beznau nuclear power plant due to restrictions on the use of hot water to cool the reactors. . EDF in France has warned for weeks that its nuclear power generation in France will be reduced because the high temperatures of the Rhône and Garonne rivers make them too hot to cool the reactors.

German utilities, for their part, are warning that some coal-fired power plants could experience erratic operations for a month due to a limited supply of coal due to low water levels on the Rhine, making transportation difficult. coal by barge.

According to reviews published on the EEX energy exchangeGerman energy giant Uniper – the one the government bailed out last month with a $15 billion package – has warned that units at two coal-fired power stations it operates could experience irregularities until September 7 .

Hot, dry weather in Germany is expected to continue for weeks, which could see German and European electricity prices climb even further ahead of winter if utilities continue to limit power generation.

By Tsvetana Paraskova for Oilprice.com

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