The European prices electricity soared to a new record as natural gas extended gains, deepening the energy crisis that threatens to plunge Europe into recession.
Next year's electricity prices in Germany rose by up to 3.7%, to EUR 477.50 (487 $) per megawatt hour, on the European Energy Exchange AG, almost six times more expensive than last year. In fact, the price doubled in just the last two months.
The market is driven by concerns about whether the limited Europe's gas suppliers will be able to generate enough electricity next winter. France's nuclear capacity is extremely low, reducing the likelihood of electricity exports in the coming months.
The next day's prices in Germany and the United Kingdom they also noted record on Monday, an indicator of high demand for cooling amid heat waves and drought, factors that put a strain on infrastructure in the short term.
Energy drives inflation
Rising energy prices «inflate» household bills and the cost of everything. Energy is driving inflation across Europe, pushing up inflation across the EU. consumer price increases in the double-digit percentage range.
In the UK, the cap on energy prices for households is expected to almost doubled in early October due to the increase in wholesale costs. The wholesale price of UK electricity for this month has roughly quintupled from last year, reaching 591 pounds ($713) per megawatt-hour on the Intercontinental Exchange AG.
European governments consider measures on how to cushion the impact of rising energy costs on their economies. In France, the State plans to fully nationalise Electricite de France SA, the nuclear power company that is now struggling to keep its plants running because of the heatwave.
Ominous forecasts
There are no indications that the extreme price rally will soon subside, Rystad Energy AS analyst Fabian Ronningen said. Low nuclear, hydro and coal capacities in Europe cannot mitigate this pressure, he said.
