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Germany’s power margin, the available electricity supply to meet demand, is set to drop this week to the lowest level so far this winter, as low wind speeds and colder weather are straining the power system, according to models compiled by Bloomberg.
This week, wind speeds in Germany have dipped again, while colder-than-usual temperatures have settled over much of northwest Europe.
Since early November, the so-called ‘Dunkelflaute’, German for “dark wind lull”, have often resulted in wind farms in Europe’s biggest economy generating only a fraction of their nameplate capacity, leading to day-ahead electricity prices for peak demand hours to high levels not seen since the peak energy crisis in 2022.
Near-term power prices have increased as supply has been fluctuating while demand has been growing with the colder temperatures. Germany has had to import more electricity from France and rely more on fossil fuels for power generation during periods of low wind speeds.
Gas-fired power generation in Germany jumped in November from October by the largest-ever monthly increase, according to data from energy think tank Ember cited by Reuters last week.
That was mostly because of the 25% lower wind power generation in October and November compared to the same two months of last year.
Germany and the rest of Europe have been drawing from natural gas storage at the highest rates since 2016, amid the cold and windless weather.
Over the past two months, the slump in wind generation – not only in Germany but in other northwest European countries, too – and the additional gas required to back up the electricity system pushed power prices higher and prompted some emergency grid stabilizing measures in several European economies.
The rising power and gas prices amid tighter margins and markets is set to hit Europe’s industry once again and force it to lose further competitiveness as high energy prices, rising natural gas prices, and concerns about gas supply this winter are increasing uncertainty about factory utilization amid rising costs.
