Germany: lignite power plants from reserve likely needed next winter

At the beginning of last week, we once again saw prices drop significantly on Monday afternoon. The electricity demand on Monday was naturally lower as it was a holiday. Due to an abundance of wind and mainly sun, prices dropped to around -150 €/MWh. Apart from solar hours, gas-fired power plants were mainly the marginal plants. The average Dutch power price last week was 58.7 €/MWh.
The gas price, which had been dropping sharply in recent weeks, remained relatively stable last week. The gas contracts for the upcoming months ultimately closed just one euro lower. Thus, July closed at 23.7 €/MWh and August at 25.2 €/MWh.
CO2 became cheaper. The contract for December 2023 closed just below 80 euros, which was about 3 euros lower at 79 €/EUA.
Dutch power contracts declined slightly. July closed nearly 5 euros lower at 71.7 €/MWh, and August closed over 6 euros lower at 73.6 €/MWh.

Germany likely needs the lignite power plants it brought back from its reserves last year in the coming winter, according to Minister of Climate Robert Habeck. The power plants, with a total capacity of only 2 GW, are initially allowed to operate from October 2022 until mid-2023, but the government may decide to extend this period. Germany wants to build more LNG terminals to increase gas imports and processing, but it faces significant opposition, including on the island of Rügen, which could cause significant delays in construction.
For next year, the gas price dropped by about one and a half euro and closed at 43.1 €/MWh. CO2 became 3.5 euros cheaper and settled at 82.9 €/EUA. The Dutch power contract for 2024 became 2 euros cheaper and closed at 107.3 €/MWh.
The clean spark spread (CSS) for 2024 improved but remained negative at -4.6 €/MWh. The clean dark spread (CDS) was positive at 1 €/MWh.

Weekly changes