Electricity prices in Europe are soaring again as the market starts to fear that energy shortages this winter would be much larger than expected a few weeks ago.
The German power prices for next year, a benchmark in the European electricity market, have surged by 12 percent so far this week and were rising by 2 percent early on Thursday, according to Bloomberg estimates.
Europe is grappling with filling gas storage in time for the winter, after Russia slashed supply to major EU consumers, including Germany and Italy, citing "technical reasons." Germany and Italy dismissed Gazprom's reasons for the lower flows and said the move was politically motivated.
At any rate, the low Russian gas deliveries and the two-week maintenance on Nord Stream which will halt supply via the pipeline in July are making European governments and electricity market traders and participants nervous about gas and power supply.
In addition, France has been experiencing outages at its nuclear reactors in recent months, which has slashed power generation from nuclear power plants. France's nuclear power generation accounts for around 70 percent of its electricity mix, and in normal operations of reactors, it is a net exporter of electricity to other European countries. Prolonged maintenance at several nuclear reactors this year, however, means that France-and the rest of Europe-have less nuclear-generated power supply now.
As a result of all these factors, power prices in Germany, France, and the rest of Europe renewed their rise in recent weeks.
"It seems like the market is starting to price in a more pessimistic scenario for the winter," Rystad Energy analyst Carlos Torres Diaz told Bloomberg.
Europe has elevated the level of alert for energy supply after Russia slashed gas supply two weeks ago and no one is ruling out now a complete halt of Russian gas deliveries to the EU.
Last week, Germany even triggered the second phase of its three-phase gas emergency plan as it braces for the possibility of a complete halt of gas supplies from Russia via Nord Stream.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More