Wholesale electricity and gas prices have been climbing from one record to the next for months. Now they have literally exploded again: to a level that was hardly imaginable before the current crisis.
For weeks now, the futures price for one megawatt hour, which is the benchmark for the German and European electricity market, has been breaking one record after another: last month the 400 euro mark, last week 500 euros for the first time and today with an increase of more than 25 percent within a few hours the mark of 600 and then 700 euros. This is the largest increase ever recorded in one day. For comparison: Before the price began its steep rise in 2021, it had fluctuated around 50 euros in previous years. The future price is the price for the delivery of one megawatt hour of electricity in the coming year.
The exchange price for gas, which has been at a record level for months, rose again by more than 20 percent at times and approached the 300 euro mark. That's nearly a fivefold year-to-date increase and about 20x the long-term average price at the start of last year's dramatic rise.
The latest price explosion was apparently triggered by the news last Friday that Gazprom would again completely stop the already heavily reduced gas supplies through the Nord Stream 1 pipeline for three days. The official reason given by the Russian export monopolist was further necessary maintenance work. However, the announcement raises concerns that Russian gas could soon stop altogether. It is feared that this could necessitate further austerity measures and plunge Germany into a deep economic crisis.
In addition, there are increasing signs that Germany not only has to fear an acute gas shortage in the coming winter, but is also facing an electricity crisis. Plans to replace gas power generation, which has become extremely expensive, with the use of additional coal-fired power plants have stalled. Neighboring countries connected to the German electricity market are also experiencing unusual electricity shortages. In France, for example, only about half of the nuclear power plants are currently in operation due to technical problems and the dramatic low water in many rivers.
