Heatwave strikes! Electricity prices in Germany and the UK soar to highest levels since 2022, UK issues rare "summer blackout" warning.
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The European power system is currently enduring the impact of the latest heatwave. The high temperatures have significantly increased electricity demand for cooling, while also limiting the actual output capacity of certain power generation facilities, resulting in sharp electricity price fluctuations.
On June 24, according to Bloomberg citing EPEX Spot data, the average electricity prices in Germany and the UK are expected to reach the highest levels for this period since the 2022 energy crisis. France's average June price is also set to hit its highest since 2023.
It is noteworthy that the evening electricity price premiums in both France and Germany have widened significantly, mainly due to the combined effects of surging air conditioning demand and intraday declines in photovoltaic output. According to EPEX Spot data, Germany's spot price at 8 pm local time on Wednesday is expected to climb to €665.82 per MWh, while France's price will reach €313.36 per MWh at 7 pm.
In the UK, signs of tightening power supply and demand are also apparent. The grid operator National Energy System Operator has rarely issued a summer electricity margin warning, stating that there could be a supply shortfall of about 1.4 GW during the Wednesday evening period, calling on power generators to submit offers for additional available capacity.
It should be noted that while high electricity prices do not necessarily mean a supply crisis, they clearly indicate tightening system margins.
Double Whammy of Heatwave: Rising Cooling Load and Weakened Wind Resources
The high temperatures are affecting the structure of the European power market from both the demand and supply sides.
On the demand side, household and commercial cooling loads have risen significantly, driving up electricity consumption. On the supply side, high-pressure systems are suppressing wind speeds, resulting in persistently low wind power generation in core markets like Germany and France.
Intraday price pressures are concentrated in the evening hours. During the day, solar generation can partially relieve supply pressure, but after sunset, solar output quickly drops to zero while cooling demand remains high. The system then has to rely on peaking fossil fuel units with higher marginal costs, pushing up real-time electricity prices.
France’s nuclear power supply has also been constrained by the heatwave. With river water temperatures rising, to comply with ecological limits on cooling water discharge, some nuclear units have been forced to reduce output or shut down. EDF disclosed that Golfech 2 has been shut down, while Nogent 2 and Bugey 3 continue to operate at reduced load; Blayais and Saint-Alban may also have to further limit output on Wednesday and Thursday due to high temperature restrictions on discharge.
In Germany, the Niehl 3 gas unit suffered a minor malfunction, lowering its output. Energy Aspects analyst Sabrina Kernbichler pointed out that extreme temperatures may further restrict the afternoon generation capacity of gas-fired units.
Grid Equipment Under Pressure: Extreme Temperatures Expose Vulnerabilities
High temperatures not only suppress power generation but also impose operational constraints on transmission networks. Rising ambient temperatures decrease the current-carrying capacity of overhead lines, as conductors sag more when heated, reducing safe clearance from the ground and limiting actual available transmission capacity.
The French grid operator RTE has announced the activation of its heatwave contingency plan, and may, if necessary, proactively lower the transmission capacity of some overhead lines to manage the risk of conductor sagging. RTE chairman Emilie Piette confirmed on Tuesday that these measures focus on the physical safety hazards caused by thermal expansion of the lines.
In Brittany, about 68,000 households experienced outages caused by two transformer faults, allegedly the result of extreme heat triggering equipment explosions.
Nevertheless, RTE’s assessment on Monday stated that current available generating resources are still sufficient to cover peak demand resulting from increased air conditioning loads. Germany’s largest transmission system operator, Tennet, also indicated that the heatwave has not yet caused operational concerns, their grid remains at normal operation, and the company has already completed adaptive preparations for extreme weather conditions.
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