Status: 10/17/2022 1:49 p.m
The gas price is now at its lowest level since the end of June. The markets are feeling the effects of the progress made in supplying substitutes for Russian natural gas. However, the electricity grid fees are rising sharply.
The price of European natural gas continued to fall at the beginning of the week – albeit at a persistently high level. This morning, gas in the futures contract TTF for Dutch natural gas, which is considered to point the way, was at a low of around 132 euros per megawatt hour. That was a good five percent less than on Friday.
This put the TTF contract, which is used as an indicator for the general price level on the European natural gas market, at its lowest level since the end of June. The TTF price has been falling noticeably for a few weeks now. For comparison: at the end of September it was still 223 euros. In August, the price jumped to a record high of more than 300 euros per megawatt hour.
Gas market relaxes a little
The fundamentally tense situation on the gas market has improved somewhat in recent weeks. The background to this are political efforts to free Europe from its previously high dependence on Russian natural gas. France, for example, began delivering gas to Germany on Thursday. In principle, it has been agreed that up to 100 gigawatt hours should flow daily in the future.
A faster expansion of renewable energies is also planned, as well as partnerships for the delivery of liquefied natural gas (LNG). The European Union (EU) is also planning joint gas purchases. The natural gas storage facilities are now well filled, so that the energy risks have been reduced somewhat with a view to the winter months. In Germany, the filling levels recently reached an average of 95 percent, which was actually only targeted for November 1st.
In addition, there are many initiatives to curb natural gas consumption. In Germany it has to drop by at least 20 percent, said Klaus Müller, President of the Federal Network Agency. Household consumption data had recently made it clear that not enough was being saved.
Gas price brake could relieve families by more than 1000 euros
Despite the current decline, gas prices are still at a historically high level – in spring 2021, a megawatt hour of gas cost less than 20 euros. This is also noticeable in German households.
According to a current analysis by the comparison portal Check24, a model household with 20,000 kilowatt hours (kWh) currently pays an average of 3726 euros per year for gas. This corresponds to an average price of 18.6 cents per kWh. In October 2021, the same amount of gas still cost 1365 euros. This is an increase of 173 percent compared to the previous year.
A government gas price brake is intended to curb costs for consumers. According to Check24, starting in March, a planned capping of the price to 12 cents per kWh, as proposed by the commission of experts last week, would save a family 1,056 euros per year, and a single (5,000 kWh) 264 euros. The one-time payment in December in the amount of a monthly deduction would therefore mean a relief of five billion euros for all gas customers.
Electricity grid fees more expensive due to fluctuations
The electricity price on the exchange has also fallen significantly since the all-time high at the end of August (706 euros per MWh). Today, the exchange electricity price is 152 euros per megawatt hour. Due to high gas prices, however, it is still at a record level. The average electricity price for consumers increased slightly in October compared to the previous month. According to Check24, a model household (5000 kWh) pays an average of 2187 euros per year for electricity. This corresponds to an average price of 43.7 cents per kWh. In the same month last year it was still 1556 euros.
In addition, there is the usage fee for the electricity network. According to the comparison portal, the trend in these fees is clearly upwards with a plus of 20 percent. A model household with a consumption of 5000 kWh of electricity paid an average of 438 euros for network use in 2022, in the coming year it will probably be 525 euros. “This is because it could become more expensive for network operators this winter to keep the networks stable if there are strong fluctuations in electricity consumption and generation,” said Steffen Suttner, Managing Director Energy at Check24.