New energy market reports covering the third quarter of 2018

The European Commission’s latest reports on gas and electricity markets, which cover the third quarter of 2018, have just been published, containing a wide range of data about supply and usage of electricity and gas in the EU.

The electricity market report confirmed that wholesale electricity prices in the EU rose in the third quarter of 2018, and in September 2018 they reached 63 €/MWh on monthly average, which was the highest since January 2017. Increase in the wholesale electricity prices was supported by increasing gas, carbon and high coal prices. The emission allowances prices rose above 20€/Mt for the first time since a decade, and in September 2018 they were 21 €/Mt on average, practically quadrupling since September 2017. Concerns resulting from low nuclear generation capacity availability in Belgium, anticipated for the last months of 2018, resulted in frequent spikes in the Belgian hourly wholesale electricity price; in some cases reaching 400 €/MWh in September 2018. In July and August, as temperatures were often higher than usual across the European continent, electricity demand in the residential sector increased measurably to respond elevated cooling needs. Although on quarterly average the electricity generation mix did not change too much compared to Q3 2017, during the hot summer period wind generation decreased, leaving more room for gas-fired power generation that provided for an upward pressure on wholesale electricity prices.

The gas market report shows that in the third quarter of  2018, wholesale gas prices in Europe continued to increase and in September 2018 they reached the highest monthly average, around 27-29 €/MWh, since December 2013. The increase in wholesale gas prices was a result of higher crude oil prices, affecting oil-indexed gas contracts, and the general strong support from high-energy market prices. In Q3 2018 both gas consumption and imports decreased compared to the same period of 2017, however, the share of gas in power generation increased year-on-year. Russia remained a key gas supplier to the EU, ensuring 47% of extra-EU gas imports in Q3 2018. Contrary to the last two summers, LNG imports in Europe did not pick up, as price premium of Asian gas markets remained significant to Europe, resulting in a profitable alternative for LNG cargos in Asia. However, following the meeting between Commission President Juncker and US President Trump in July 2018, LNG imports from the US picked up in the last months of 2018 and new long-term LNG imports were concluded between European and US firms.

Latest reports on gas and electricity markets