Electricity prices on German exchange exceed 100 euros per megawatt-hour

The wholesale price of electricity for the German market, with delivery next year and a key benchmark for Europe, today exceeded 100 euros (roughly 2500 Kč) per megawatt-hour (MWh). Analysts say several factors are driving up electricity prices, including rising consumption, higher prices for emissions allowances and natural gas, and lower output from wind farms in Germany.

“The price of the annual electricity contract exceeded 100 euros per MWh on Wednesday. This is the highest price since the beginning of December last year. Electricity is responding to rising prices for emissions allowances and gas, which has also climbed to its highest levels this year,” Jiří Tyleček, an analyst at XTB, told CTK.

“The market is seeing increased demand as the European economy accelerates, while the positive effect of a mild winter and relatively full gas storage facilities has run its course. An influx of speculative liquidity is also affecting commodity markets,” the analyst warned.

In the long term, Tyleček says, electricity prices should be expected to remain higher, at three-digit levels. “Rising prices go hand in hand with the greening of the energy sector and the planned phase-down of cheap coal-fired power plants in the coming years. I see the price declines of recent months as a medium-term fluctuation following a period of extreme market movements. In the coming months, I expect prices to rise gradually, depending on the pace of economic growth in Central Europe,” Tyleček said.

Analyst Naser Hashemi of LSEG pointed to lower output from wind farms in Germany and rising regional demand as factors behind today’s increase in electricity prices. These factors, he said, offset the outlook for increased output from solar power plants in Germany.