Given recent developments in the wholesale and futures markets, the outlook for retail electricity prices in September is bleak.
High temperatures not only affect demand but also have an impact on production, for example in electricity generation from nuclear reactors in France.
In the first 14 days of August, the average wholesale price of electricity in Greece was 122.48 euros per megawatt hour, the second highest in Europe after Italy (127.92 euros/MWh). Demand was covered by renewable energy sources (41.7 percent), natural gas (38.3 percent), hydropower (5.4 percent), lignite (4.1 percent) and electricity imports (5.9 percent).
September natural gas futures on the Amsterdam-based Title Transfer Facility (TTF) have been trading at around €40/MWh in recent days and analysts are forecasting that the price could rise to as much as €50 if Russian gas flows through Ukraine are temporarily disrupted. This seems increasingly likely following the Ukrainian incursion into the Kursk region, where the Sudzha gas metering point is located.
Europe has largely weaned itself off Russian gas imports since the Russian invasion of Ukraine in February 2022, but some countries such as Austria, Hungary, Italy and Slovakia are still highly dependent on it. Gazprom supplied about 15 billion cubic meters of gas through the Sudzha point, accounting for 4.5% of total European consumption.
Competition with Asia for liquefied natural gas (LNG) is further restricting the European market and reducing gas reserves for the winter.
The heatwave in Western Europe has not only led to a surge in demand, but also reduced the production of nuclear power in France. French energy company EDF has cut the capacity of three nuclear reactors in southern France by about 2.4 gigawatts and will make further cuts by next week. According to energy market news service Montel, EDF has severely reduced the capacity of three nuclear power plants and plans to shut down a fourth completely for 24 hours.
At the Golfech nuclear power plant in the southern Tarn-et-Garonne department, the capacity of one unit was reduced by almost 80 percent until Wednesday, while the second reactor will remain out of service until August 26 for safety reasons and to save fuel. Temperatures in southwest France have exceeded 40 degrees Celsius.
