June 23, 2024
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EU: Electricity and gas markets continued recovery in Q3

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European electricity and gas markets in the third quarter of 2023 were characterised by continued recovery from record high price levels seen in 2022, but gas prices showed that the market remains volatile, according to the quarterly reports on the EU gas and electricity markets. The gas markets report outlines the continued decline in gas consumption and production, lower import volumes and gradually increasing wholesale prices amidst increased market volatility. Overall, the EU gas market strengthened resilience and continued its structural changes away from Russian pipeline gas supply and towards a more prominent role for liquefied natural gas (LNG), more hub trading, accelerating the shift towards renewable energy sources and greater gas consumption savings. The electricity markets report highlights the continued decline in wholesale prices on the European electricity markets and increasing shares of renewables.

Q3 2023 gas market report

According to the gas market reportEU gas consumption continued to decline and was below the consumption range of the last seven years. Total gas consumption was 56 billion cubic metres  (bcm) from July-September 2023 – that’s 14% lower than in the previous quarter and 7% lower than the same period in 2022.

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EU domestic gas production also continued its declining trend. Total production was 9 bcm, 5% down from the previous quarter and 18% less than in the same quarter of 2022.

EU gas storage reached a record level of 96% (1089 TWh, 111 bcm) at the end of September 2023. The average filling rate of the quarter was 88% (1003 TWh, 103 bcm) – 35% higher than in the previous quarter and 17% higher than in the same period of the previous year. Storage filling rates at the end of the quarter were over 90% in all EU countries and at record high levels compared to the previous years.

EU gas imports decreased by 13% quarter-on-quarter and by 17 % year-on-year. Total gas imports amounted to 68 bcm, compared to 78 bcm in the second quarter of 2023 and 82 bcm in the third quarter of 2022.

EU pipeline imports decreased by 6% quarter-on-quarter and by 19% year-on-year resulting from reduced pipeline flows from Norway amidst continued maintenance works on several production sites and less supply from the UK. Pipeline imports from Russia were slightly higher compared to the previous quarter, but clearly down on 2022 figures,  while imports from Azerbaijan and North Africa remained stable.

Total EU LNG imports decreased by 17% compared to the previous quarter and by 6% year-on-year. The United States remained the EU’s biggest LNG supplier and further increased its share to 47% from 45% in the previous quarter, followed by Qatar (14%) and Russia (13%). The EU’s biggest LNG importer remained France (21%), followed by Spain (18%), and The Netherlands (18%). The EU remained the largest LNG importer in the world with 24% share in global LNG imports, ahead of China (18%) and Japan (17%).

Imports of Russian gas from July to September 2023 amounted to 11 bcm, which represents just 16%  of the EU’s total gas imports – and is 18% down on the same period in 2022 and 70% lower than the same quarter of the pre-crisis year of 2021.

European wholesale gas prices displayed high volatility. The downward trend of prices stopped and prices fluctuated between 30 €/MWh and 40 €/MWh. The quarterly average spot price was 33 €/MWh, 5% lower than in the previous quarter, and 83% lower than in Q3 2022. European gas prices were on average 7% lower than Asian prices in the third quarter. In a year-on-year comparison, prices declined in all major global gas price benchmarks by between 83% and 67% the biggest drop being registered in Europe and the smallest in the US.

The average monthly gas retail price for household consumers continued to decline in the third quarter of 2023 although at a slower pace than in the previous quarter. The quarterly average retail gas price was 6% lower than in the previous quarter and 30% lower year-on-year. Compared to the third quarter of the pre-crisis year (2021), retail prices were 43% higher and 61% higher compared to historic prices (2021’s first half).

Q3 2023 Electricity market report

The electricity market report underlines that the third quarter of 2023 was marked by a continuation of positive market fundamentals that supported lower wholesale electricity prices.

The European Power Benchmarkaveraged 85 €/MWh in the third quarter of 2023– 74% lower than in the third quarter of the previous year.

Every year, practically all EU countries experienced a decline in prices on their wholesale electricity markets (ranging from -80% to -33%). The largest year-on-year declines were registered in Finland France (-80%) and Denmark (-77%). The lowest quarterly average prices during Q3 2023 were recorded in Sweden and Finland, at 29 €/MWh and 44 €/MWh, respectively. Conversely, the highest prices during the quarter were recorded in Malta and Italy (116 and 113 €/MWh, respectively) but still they were 75% and 76% lower than in the third quarter of 2022.

EU electricity consumption in the third quarter of 2023 fell by 4% compared with last year’s levels. Electricity consumption in the third quarter of 2023 was lower than the third quarter of 2020, which was historically low due to the impact of COVID-19.

At the same time, the share of electricity generated by renewables increased for the third consecutive quarter to 46% in Q3 2023 (from 37% in the third quarter of the previous year), while the share of fossil fuels-fired electricity fell significantly to 32% (from 41% in the third quarter of the previous year). In the third quarter of 2022, solar generation surged by 23% (+13 TWh) and onshore wind output rose by 21% (+13 TWh). Hydropower recovered by 12% (+8 TWh), while offshore wind generation increased by 14% (+1 TWh). Overall, wind and solar generation together (155 TWh) registered an increase of +21% (+27 TWh) compared with the same quarter of the previous year. Fossil fuel generation dropped by 23% (-55 TWh) in Q3 2023. Coal-fired generation fell by 39% (-41 TWh), whereas less CO2-intensive gas generation dropped by 17% (-19 TWh). The fall in fossil fuel generation was supported by lower demand and sustained renewable generation. Nuclear generation recovered in the third quarter of 2023, rising by 7% (+10 TWh) when compared with the quarter of the previous year.

The decrease in wholesale electricity prices registered in the third quarter of 2023 continued to alleviate pressure on household electricity retail prices across the EU. Retail electricity prices for household customers in EU capital cities were down by 16% in the third quarter of 2023, compared with the same quarter in 2022. However, prices in Q3 2023 remained only marginally below the previous quarter (Q2 2023).

The record number of hours with negative wholesale prices in Q3 2023 (2898 hours) was 85 times higher than in Q3 2022 (32). Most of the negative hourly price instances occurred in September (1518), during periods of high solar and wind generation and low electricity demand.

Close to 605,000 new electric vehicles (EVs) were registered in the EU in the third quarter of 2023, an increase of 36% compared to the same quarter in 2022. Demand for EVs in the third quarter of 2023 was the second-largest quarterly figure on record and translated into 24% of market share.

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