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German Power Prices Drop to June Lows Amid Strong Winds

Bloomberg Markets •
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German day-ahead power prices fell to their lowest level since June amid strong wind generation, creating an unusual price gap with neighboring France. German power prices for Saturday dropped 53% from Friday to €42.14 per megawatt-hour, according to Epex Spot data. Prices in France are almost twice as high, an unusual reversal as German electricity typically trades at a premium.

Strong winds are behind the drop in Germany, with generation forecast to peak at around 50 gigawatts at 4 p.m. — more than enough to cover the country’s electricity demand at that time, according to Bloomberg models. Germany’s growing fleet of wind and solar farms can provide abundant cheap electricity when weather conditions are favorable. But prices can rise sharply when renewable output falls and the country has to rely more heavily on fossil-fuel plants and imports.

France, meanwhile, is facing a prolonged slump in nuclear availability, forcing it to burn more gas to generate electricity. French gas-fired generation has peaked at an average 3.29 gigawatts a day over the past week, more than double the 1.27-gigawatt average during the same period last year, according to RTE data. Despite the divergence in daily prices, electricity in both countries turns negative around the middle of the day when solar generation peaks.

German prices fall as low as minus €19 per megawatt-hour at 2 p.m., according to Epex Spot data.