Power generation from gas-fired power plants in Europe rose by around 40 percent in the first half of October compared with the average for September. This was due to a sharp decline in electricity generation from renewable energies and the seasonal increase in electricity demand.
Natural gas accounts for a quarter of power production
European gas-fired power plants produced up to 72 GW in the middle of the month, with an average of around 49 GW in the first half of October. In September, an average of 35 GW was fed into the electricity grid, with a peak load of 55 GW.
Compared to the same period last year, this also represented an increase of over 40 percent. The strong growth can be explained mainly by the low availability of hydropower and very low wind speeds.
Wind power generation fell to up to 20 GW in the middle of October, compared to an average of 50 GW on the grid in the previous month. Natural gas as a fuel topped the merit order on October 14 and 15, accounting for around a quarter of total European electricity generation on those days.
Important role of flexible gas-fired power plants
The growth within just a few days is particularly impressive. In the first week of October, electricity generation from gas-fired power plants fell to around 20 GW and then rose to 72 GW within about a week. This corresponds to an increase of around 350 percent.
The combination of weak wind power generation, low hydropower, below-average solar power generation, and slightly colder temperatures than usual for the season led to the first minor “dark doldrums” in the still young winter season.
Renewable energy production, especially wind power generation, is thus becoming an increasingly important driver of gas demand in winter. This underscores the growing importance of flexible gas-fired power plants in the European electricity system as an important reserve energy source.
Gas storage as the most important source of flexibility
Gas consumption thus rose by over 30 percent in the first half of the month compared with the previous month. The additional demand was met by a slight increase in LNG shipments, but mainly by a significant increase in withdrawals from storage.
Net withdrawals in Europe peaked at just under 1.5 TWh per day. In the first half of October, therefore, only a net total of 5 TWh was stored, compared to a five-year average of over 20 TWh during this period, representing a decline of around 80 percent.
Low storage levels could lead to price spikes
Gas storage facilities in EU countries are 82 percent full, just under 9 percentage points below the average for the last five years.
In Germany, gas storage facilities are only 75 percent full, 16 percentage points below the benchmark. Germany’s largest gas storage facility, Rehden, is only 28 percent full; there have been no significant storage movements there since the beginning of October.
When it gets really cold, the new LNG capacities should largely secure supplies in EU countries. Nevertheless, a stress scenario with very cold temperatures could lead to significant price movements. Some analysts expect price spikes of up to EUR 150/MWh in a worst-case scenario.