European power soars on gas supply fears; German spot hits record high

European power spot and curve contracts surged Aug. 22 following the unexpected planned halt of Nord Stream 1 gas flows, with German spot hitting a record high.

Russia's Gazprom said late Aug. 19 that it would reduce gas supplies through the Nord Stream pipeline to Germany to zero Aug. 31-Sept. 2 for maintenance works. The announcement came too late to have a significant impact on power prices Aug. 19, but all contracts opened considerably higher Aug. 22.

"That news came out 10 minutes before the close on Friday, so a lot of the market had left already," a Germany-based gas trader said. "So, there was an underreaction."

"Even if it does come back, there is a new three-day outage. And the risk of [Nord Stream] not coming back is certainly bigger."

In Germany -- the largest European power market -- the day-ahead price settled at Eur563.81/MWh Aug. 22, gaining 9% from Aug. 19, Epex data showed. This was very close to the previous record of Eur563.76/MWh registered Aug. 18.

Spot prices across other markets saw ample gains, yet they remained below the recent records. In the UK, baseload and peakload day-ahead prices both added GBP75/MWh from the previous session. Platts assessed the contracts at GBP515/MWh and GBP542.5/MWh, respectively.

The record of GBP540/MWh for a UK baseload day-ahead was achieved Sept. 13, 2021, driven by particularly low wind power generation.

Similarly, across the region, the French baseload day-ahead settled at Eur571.34/MWh, up 12% from Aug. 19. That was still below the record high of Eur589.23/MWh seen July 20.

Across the curve, gains were similar, with multiple contracts firmly on track to hit records. For instance, the German September price was seen trading Eur579/MWh in the late afternoon on EEX, gaining 15% from the previous settlement.