July 26 (Bloomberg) -- Electricity prices in Germany are headed for their longest rising streak since 2011 as Europe’s biggest power user prepares for its hottest weekend of the year.
Day-ahead prices have gained 0.3 percent since July 21, extending a 34 percent increase over the previous three weeks on the Epex Spot SE exchange in Leipzig, Germany. Temperatures tomorrow and July 28 may rise to records near the upper Rhine in the southwest of the country and on the eastern border with Poland as highs approach 40 degrees Celsius (104 Fahrenheit), according to national forecaster Deutscher Wetterdienst.
The heat has boosted electricity use for air conditioners and fans and lowered the efficiency of thermal power stations at a time when they typically undergo maintenance, cutting supply. The reduction has been exacerbated by a drop in wind generation as Germany increasingly relies on turbines and solar panels to meet the demands of Europe’s most populous country.
“At the weekend there will be a new top of the heat wave, with temperatures above 35 degrees Celsius,” Andreas Friedrich, a meteorologist at Deutscher Wetterdienst in Offenbach, near Frankfurt, said by phone on July 23. “Maybe in the Rhine valley near to 40 degrees.”
Baseload power for the next day, for delivery around the clock, sold for 43 euros a megawatt-hour in a daily auction on EPEX Spot yesterday, 0.3 percent more than at the start of the week and above the average of 37.33 euros this year. A fourth weekly increase would be the longest run of gains since November 2011. The weekend contract traded at 30.75 euros at 10:51 a.m. Berlin time, the highest for a Friday since April 4, according to broker data compiled by Bloomberg.
Wind generation has averaged 2,592 megawatts so far this month, according to EEX data on Bloomberg, 46 percent less than the 12-month average of 4,772 megawatts.
“There is not much wind so if it stays hot here then we have the possibility for higher prices,” Min-Soo Park, a power trader at MVV Trading GmbH in Mannheim, Germany, said by telephone.
Germany is building wind and solar plants as the nation seeks to source 35 percent of its power from renewables by 2020, up from 22 percent now, and seeks to close all of its nuclear reactors by 2022.
Available generation capacity yesterday was 19 percent lower than on a typical winter day in December, according to data from European Energy Exchange AG.
Temperatures this month may average as much as 20 degrees, above the 18-degree norm for July, and record highs may be set at weather stations such as Frankfurt, Friedrich said.
The highest-ever temperature recorded in Germany is 40.2 degrees in Freiburg and Karlsruhe on Aug. 13, 2003, Jonathan Tunster, a forecaster at MetraWeather in Reading, England, said by e-mail July 23.
In France, a rise in temperature of 1 degree during peak demand times triggers an increase in power generation of around 500 megawatts to meet higher demand, French grid operator Reseau de Transport d’Electricite said in its summer report published in May. One megawatt is enough to supply 2,000 average European homes.
“For Germany, the calculation is roughly the same during the summer,” Ricardo Klimaschka, a trader at Energie-Union GmbH in Schwerin, Germany, who has been buying and selling power for more than 12 years, said by phone yesterday.
While there may be a slightly warmer period around the middle of August, temperatures are expected to be around normal for the time of year next month, Tunster said.
“There is a fairly strong signal for a return to near-average temperatures in both the U.K. and Germany as we move into the first parts of August,” he said.
High temperatures forced EON SE, the nations’s largest utility, to cut output at its 846-megawatt gas-fired Irsching-5 plant by 100 megawatts today, Markus Nitschke, a company spokesman in Hanover, said by phone yesterday. Hotter weather expands air and gas, leading to lower combustion efficiency, he said.
EnBW Energie Baden-Wuerttemberg AG cut output at three of its hard coal-fired plants by a total of 205 megawatts due to higher water temperatures in the Rhine River, Maria Dehmer, a spokeswoman for the company in Stuttgart, said in an e-mail yesterday.
EON doesn’t have any cooling restrictions at its nuclear plants, Almut Zyweck, a company spokeswoman, said by phone from Hanover. RWE AG’s plants don’t face any production bottlenecks due the heat, according to Lothar Lambertz, a company spokesman in Essen.
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