Wholesale gas prices in the EU rose to record levels in the third quarter of 2021, influenced by global gas markets, according to the Commission’s quarterly gas market report published yesterday.
The trends identified provide a stark contrast with what was seen in the same period of 2020. The same is true for the quarterly electricity report which highlights that electricity consumption returned to pre-pandemic levels.
On the gas market, the report outlines how wholesale gas prices in Europe continued their sharp increase in the third quarter of the 2021, rising to 85 Euro/MWh by the end of September – a level rarely seen on European hubs. These high wholesale gas prices resulted in soaring wholesale electricity prices, and in turn significant increases in retail prices. The report also looks at various measures taken by at EU and Member State level to mitigate the impact of gas price increases on households and businesses.
Driving factors
The quarterly electricity market report highlights that EU consumption in the third quarter of 2021 rose to those seen in the same period of 2019, i.e. pre-pandemic levels – driven by a steady economic recovery and an easing of lockdown restrictions. EU-wide consumption increased by 3 per cent year-on-year in Q2 2021, thanks to recovering industrial and labour activity. However, the post-pandemic economic recovery has caused such a surge in global gas prices and significantly disrupted global supply chains, to drive record highs of electricity prices in European markets. The European Power Benchmark averaged 105 Euro/MWh in Q3 2021 – equivalent to 211 per cent higher than Q3 2020 and 164 per cent up on the same period in 2019. The rally of gas prices has reversed the coal-to gas switching registered in the last year, boosting coal generation gains in spite of increasing carbon prices during Q3 2021.
The report also shows that demand for electrically chargeable vehicles (ECVs) kept growing in Q3 2021. Fiscal support and purchase incentives provided in seventeen Member States continued to boost sales during 2021 – with almost 410,000 new ECVs registered in the EU from July to September 2021 – 50 per cent higher than the same period in 2020.
Related link: Previous quarterly market reports
Source: EU Commission
