The European electricity market is breaking down
Electricity prices in Europe have only one way to go -- and that’s up. Prices in Germany, France, and the UK are exceeding EUR500/MWh, about ten times 2020 levels. While the surge is driven by rapidly rising gas prices due to the war in Ukraine, it also stems from problems with nuclear generation in France, where many power plants are offline for technical reasons.
Even more concerning, electricity futures suggest the surge is far from over: prices are set to head above EUR1,000/MWh this winter, only retreating to current levels by spring, as our chart shows.
Many small businesses and energy-intensive companies would go bust if current power prices continue. And with no income-support or subsidy program in sight, consumers are reining in spending as the situation adds to an unprecedented cost-of-living crisis. It’s no wonder that the EU is signaling its intent to intervene in power markets.