Electricity prices jump in Europe as demand soars in the heatwave

The heatwave has prompted a sharp rise in electricity prices across European markets as millions turn to air conditioners and electric fans to battle record high temperatures, which have also caused a string of power plant outages across the continent.Great Britain imported electricity from Europe at more than six times the normal price on Tuesday as the high pressure heat dome has slowed wind speeds, hitting renewable energy generation, and caused outages at multiple gas plants across the country.The heatwave has caused windfarms on the continent to slow, and led to lower output at some nuclear plants in France, where high riverwater temperatures are making it more difficult to cool the reactors.The combination of rising electricity demand and falling generation across Europe has caused market prices to climb to multi-year highs.Great Britain’s energy system operator has resorted to paying about £470 per megawatt-hour to secure electricity imports from the continent between 5pm and 7pm on Tuesday evening to help meet the country’s peak electricity demand.These prices are more than six times the electricity market price in June last year, which averaged about £71/MWh, and more than three times the market price of £123/MWh on Monday.In Germany, Europe’s biggest electricity market, power market prices were forecast to reach highs of more than €545 per megawatt-hour on Tuesday evening, the highest since June 2024, according to the Epex Spot exchange.In France, which is bracing for temperatures of up to 43C (109F) this week, the power market price has climbed to over €268 per megawatt-hour, the highest since August 2023.Shivam Malhotra, the head of power trading at consultancy LCP Delta, said it was “not unusual” to see a string of unplanned outages at British gas plants, which “tend to really struggle in extreme temperatures”.Five gas plants reported that they would need to reduce their output due to “ambient” conditions, cutting about 2.5 gigawatts from the UK’s gas fleet or enough electricity to power 2.5m UK homes. The loss of capacity is about 40% higher than before the heatwave, according to Malhotra.Wind power output has also fallen due to the high pressure weather system, which has slowed wind speeds and is expected to set a new record for June temperatures in the UK. Wind power made up between 13% and 15% of the UK’s electricity on Tuesday, compared with an average of about 30% in June last year.“Wind speeds are lower too, so the energy system operator has secured around 1.5 gigawatts of extra electricity to help meet the evening peak. This is likely to come from the continent, which is having its own problems due to the heatwave,” Malhotra said.Households are also expected to play a role in helping the UK energy system to weather the heatwave, by cutting their energy use to save about 115 megawatts of electricity during peak hours through a scheme that pays energy users to cut their demand.The National Energy System Operator, which is owned by the government, has been contacted for comment.