What were some notable figures in the electricity markets this month?
October showed just how quickly the electricity market can go from calm to chaos.
At the end of the month, Germany experienced its first prolonged period of low wind and little sunshine during the heating season: cold, cloudy, and almost completely windless. Within a few days, the German day-ahead price jumped from around 13 €/MWh over the weekend to over 300 €/MWh, and even to more than 500 €/MWh in the evening hours.
The gas market further intensified the pressure. The TTF rose above 100 €/MWh for the first time since 2022, while EU gas storage facilities were only about 75 % full at the end of October (in Germany, they were even as low as about 61 %). That is about 14 percentage points below the five-year average and the lowest level for this time of year since records began.
What are some possible reasons for this market behavior?
Wind has become the decisive factor in the electricity markets. Solar power now plays only a minor role, and since the switch to standard time, the evening peak begins as early as 5 p.m. because it gets dark so early.
The result is an all-or-nothing market:
- Light winds and high demand on weekday evenings: Prices are skyrocketing.
- Strong winds and low demand, especially on weekends: Prices are leveling off, with narrow spreads, or are even falling to nearly zero.
Gas markets continue to be affected by the ongoing disruptions in the Strait of Hormuz. With Europe's storage levels at record lows, any supply risk is quickly priced into the market.
What are your expectations for next month?
We expect this fluctuation between extremes to define the winter. Gas prices are keeping overall prices high, while wind conditions determine whether a given day will see extreme spikes or flat, stable prices.
When it comes to natural gas, there’s no turning back: Europe has been firmly in the drawdown phase since the end of October. Although the start of the drawdown was delayed slightly this year compared to last year, that buffer has now been used up. Whether the supplies will be sufficient depends on the weather.
The polar vortex is already the subject of widespread online discussion, with predictions ranging from mild to very cold weeks. For us, this shows one thing above all: No one really knows yet what this winter will bring.
