Quarterly market reports highlight unprecedented gas and power prices in the EU in Q4 2021

Wholesale gas prices in the EU rose to record levels in the last quarter of 2021, influenced by the tightness of global gas markets and growing geopolitical tensions, according to the Commission’s quarterly gas market report published today. The trends seen from October to December 2021 represent a significant increase compared to the same period in 2020. The quarterly electricity report highlights that electricity consumption returned to pre-pandemic levels and that prices hit record highs on several occasions, but it also shows the considerable progress in boosting renewable capacity in the EU in the course of 2021.

Q4 2021 gas market report

The quarterly gas report outlines the volatility of gas prices in the fourth quarter of 2021, noting how the TTF spot price went from 85 €/MWh to unprecedented levels of 183 €/MWh on 21 December (subsequently exceeded in 2022), to finish the year at 60 €/MWh.

Analysis highlights the extent to which imports from the EU’s main supplier influenced the situation. Russian pipeline supplies fell by 24% year-on-year and covered only 37% of extra-EU net gas imports in Q4 2021 (the lowest share in the last eight years), followed by Norway (24%), and liquefied natural gas (LNG) imports, amounting to 22%. Imports via the Belarus and Ukrainian transit routes fell significantly (respectively by 56% and 36% year-on-year in Q4 2021), whereas volumes through NordStream 1 remained unchanged and through Turk Stream increased by 43%. (Spanish pipeline imports from Algeria fell by 27% in Q4 2021 year-on-year, because the contract of the GME pipeline through Morocco expired at the end of October.)

Linked to this, low gas storage levels in Q4 2021 influenced the market – with the average EU storage filling rate of 74.6% at the end of September falling to 53% by the end of the year – the lowest December level in a decade. The report confirms that storage levels in facilities managed by Gazprom remained particularly low during the whole winter.

In this context, EU imports of LNG rose to 22bcm in the fourth quarter – up 33% on the same period in 2020 – bringing the annual total to a record 80bcm.

These market developments had a marked impact on retail prices, with retail gas prices for industrial customers up by 36% year-on-year in Q4 2021 for consumers with median annual consumption.

Q4 2021 electricity market report

The quarterly electricity market report points out that after the dramatic, pandemic-related fall in 2020, EU consumption in the last quarter of 2021 rose back to levels seen in the same period of 2019. This post-covid rise in demand has driven electricity prices to unprecedented highs. The European Power Benchmark averaged 194 €/MWh in Q4 2021 – equivalent to 400% higher than Q4 2020 and an 85% increase from Q3 2021.

The rally of gas prices saw a reversal of the coal-to-gas switching trend, with coal generation making gains in spite of increasing carbon prices during Q4 2021.

Despite increased levels of fossil generation, the share of renewables still managed to reach 38% - outperforming fossil fuels (35%) in 2021. Compared to pre-pandemic levels (2019), renewable generation increased its output by 10% (+90 TWh) in a period which saw a drop of 6% (-58 TWh) of fossil fuel and 4% (-32 TWh) of nuclear generation. In addition, a new record of installed renewable capacity was reached in the EU in 2021, as 37 GW of solar and wind capacity were added to the system - 20% higher than 12 months earlier.

The report also shows that demand for electrically chargeable vehicles (ECVs) reached new highs in Q4 2021, such that 25% of newly registered vehicles were ECVs. The 532,000 new ECVs registered in the EU from October to December 2021 – 12% higher than the same period in 2020 – took the annual sales figure to more than 1.7 million vehicles in 2021.

Related links

• Gas and electricity market reports