Another heatwave hits Western Europe: how did the June heatwave affect electricity markets?

A record heatwave that hit much of Europe in June caused major volatility in the wholesale electricity market. In Hungary, wholesale electricity prices rose to an 18-month high, driving prices up in neighbouring Serbia and Romania as well. Germany recorded some of the highest electricity prices in its history. Belgium, the Netherlands, Denmark and Poland also reported similar spikes, while French utility EDF had to curtail almost 12% of its nuclear fleet’s capacity because of warm river water.

The heatwave, which gradually swept across almost the entire continent in June, followed a similar pattern in different countries. Temperatures climbed well above seasonal averages across much of Europe—reaching 44 °C in France and more than 40 °C in Germany, approaching 40 °C in Hungary, while the United Kingdom set a new June record of 38 °C. The extreme heat increased demand for cooling, while also limiting the availability of thermal and nuclear power plants as river water needed to cool power stations grew warmer.

A second common factor was a lack of wind. Low wind power generation, combined with high demand for cooling, drove so-called residual load—the electricity demand not met by renewable energy sources—well above usual levels, not only in Germany but across the entire Central European region.

As a result, wholesale electricity prices exceeded 500 EUR/MWh in several countries at the same time, and even rose above 1,000 EUR/MWh in southeastern Europe.

Germany and Benelux: a combination of weak winds and cuts to French generation

The first major price spike came on 23 June. On the German day-ahead market, the highest price reached 615 EUR/MWh, a record since the introduction of 15-minute trading. An even higher price was recorded the very next day, reaching 747 EUR/MWh during the evening peak.

Neighbouring markets recorded even higher prices. The electricity price peaked at 1038 EUR/MWh in Belgium and 902 EUR/MWh in the Netherlands.

The main reason was very low wind power generation. After sunset, so-called residual system load rose sharply and had to be met primarily by conventional power plants. Another factor was high temperatures in France, which forced nuclear plant operator EDF to curtail generation.

Because river water was too warm, EDF gradually reduced the output of several units, limiting the amount of electricity available for export to neighbouring countries. Analysts also warned that extreme temperatures were reducing the efficiency of gas-fired power plants and photovoltaic panels.

A week later, a similar situation occurred. German prices did not break the record, but once again exceeded 530 EUR/MWh, while prices above 500 EUR/MWh were also recorded in Belgium, the Netherlands, Denmark and Poland.

France: heat curtailed almost 12% of the nuclear fleet’s capacity

France saw the greatest impact of high temperatures on electricity generation. Temperatures reached as high as 44 °C in some areas, leading to successive generation cuts at the Golfech, Bugey, St Alban, Nogent and Chooz power plants.

By the end of June, around 7.3 GW of nuclear capacity had been curtailed or shut down because of high river water temperatures—almost 12% of the installed capacity of France’s nuclear fleet.

Under environmental rules, EDF must reduce generation if discharged cooling water would raise river temperatures too much.

The heat also increased electricity consumption for cooling, leaving France with both lower generation and higher domestic demand, which exceeded the seasonal norm by 12 GW.

Southeastern Europe

Hungary played a key role in the June rise in wholesale electricity prices. The average day-ahead electricity price there rose by 31% to 290.71 EUR/MWh on Tuesday, 30 June, its highest level in 18 months. River water temperatures forced the operator of the 2 GW Paks nuclear power plant to limit reactor cooling.

“To replace the lost nuclear output, Hungary turned to gas- and oil-fired generation, the most expensive plants in the so-called merit order. Once these units began setting the marginal price, wholesale electricity prices responded accordingly,” explained Georgios Merachtsakis, an energy analyst at Montel EnAppSys.

At the request of transmission system operator Mavir, the energy regulator ultimately granted Paks a partial exemption from further output cuts, so the plant had to reduce generation by only a further 40 MW on Tuesday.

Market tensions were most pronounced during the evening peak, when day-ahead prices climbed above 900 EUR/MWh. This also affected electricity prices in neighbouring countries. Serbian prices surged to an 18-month high of 800 EUR/MWh during the evening peak, driven by a combination of the outage of 563 MW at Hungary’s Paks nuclear plant, the shutdown of Montenegro’s 250 MW Pljevlja coal-fired power plant, and restricted cross-border flows.

In Romania, where the 650 MW Cernavodă nuclear unit is offline, the price on the Opcom exchange climbed to 1015 EUR/MWh. In Slovenia, meanwhile, the wholesale electricity price reached as high as 1 041 EUR/MWh.

The region also recorded a new peak in electricity consumption. Hungary posted a summer demand peak of 7.5 GW on Tuesday, surpassing the previous record of 7 GW set in July 2024.