What were some notable figures in the electricity markets this month?
June revealed a completely different side of the summer market than April and May. While the spring was marked by negative prices and frequent supply surpluses, prices skyrocketed in June.
Despite strong solar power generation across Europe, average day-ahead electricity prices remained remarkably high: around 107 €/MWh in Germany and up to 133 €/MWh in Italy. On June 24 (8:45–9:00 p.m.), Germany even recorded a record-breaking day-ahead price of 747 €/MWh! The intraday markets proved to be even more dynamic: In Sweden (SE3), the 95th percentile rose to 1,595 €/MWh!
Negative prices, which had almost become routine in previous months, largely disappeared on weekdays and were mostly limited to isolated periods on Sundays. Even more striking were the sharper price spikes during the evening hours.
What are some possible reasons for this market behavior?
The decisive factor was Europe’s first major heat wave of the year. Higher temperatures led to an increase in electricity consumption from air conditioners and cooling systems, while at the same time the availability of conventional generation capacity declined. Many thermal and nuclear power plants rely on an adequate supply of cooling water and efficient heat dissipation. In France in particular, concerns about the availability of cooling water began to affect market expectations much earlier than many had anticipated.
At the same time, renewable energy generation continued to feed large amounts of solar power into the grid during the midday hours, leading to increasingly steep transitions between the low-cost midday hours and the expensive evening peak periods. The market therefore exhibited volatility on both sides of the curve: an abundance of solar power during the day and a shortage in the evening.
The result was a market environment that once again highlighted a familiar reality: Europe still lacks the flexibility needed to effectively balance out fluctuations in electricity prices. Batteries, flexible industrial loads, and other responsive assets remain crucial for balancing the grid and unlocking value potential from these increasingly dynamic market conditions.
What are your expectations for next month?
Since summer has just begun, we expect weather-related volatility to remain high or even increase further.
Strong solar power generation will continue to put downward pressure on prices around noon, while warm evenings and constraints on conventional power generation could lead to significant upward price spikes. This is likely to further widen intraday spreads and increase the value of flexibility.
Interestingly, current market behavior also supports the economic arguments for co-located battery storage. Storing solar power is no longer just about avoiding the low-value midday hours. The real value increasingly lies in monetizing extreme price spikes during evening peak-load periods through continuous intraday trading.
And while everyone is currently focused on the summer, the coming winter could be just as interesting. Gas inventories are currently near the lower end of their historical ranges, suggesting that volatility could remain a defining feature of the electricity markets well beyond the summer season.
One thing remains certain: The energy system still needs significantly more flexibility. Germany is still a long way from smoothing out its electricity price curve, and that creates opportunities for those who can adapt.
