Heat and Calm Winds Send Electricity Prices Soaring. Czechia Sees Evening Peak Above EUR 692/MWh

In recent days, European electricity markets have shown the opposite side of summer to that which solar investors have become accustomed to in recent months. Instead of midday drops in spot prices into negative territory, attention is being drawn to extreme evening peaks. In Czechia, prices rose above EUR 692/MWh on Wednesday, and the market expects similarly tight conditions on Thursday. The main reason for the sharp price increase is a combination of high temperatures, rising consumption due to cooling demand and weak wind power generation. While the prevailing weather over much of Europe supports solar generation, it also curbs output from wind farms. This raises electricity prices particularly during the hours when solar output is rapidly declining while demand remains high. High solar generation and low wind power output are clearly visible in the chart of electricity generation in Germany.

The situation is also being complicated by the availability of conventional generation sources. In France, some nuclear units had to reduce output due to high river water temperatures, which limit cooling options. According to Bloomberg, the restrictions affected, for example, the Nogent 2 and Bugey 3 units, while Golfech 2 was offline. Switzerland's Beznau nuclear power plant also reduced output. Higher temperatures additionally reduce the efficiency of some gas-fired plants and may also constrain transmission line capacity.