Germany Expecting Tight Power Conditions as Wind Output Falls

(Bloomberg) -- Low wind output and colder weather is pushing power system margins to the lowest this winter in Germany, with prices likely to rise.

Germany’s power margin — a measure of the available capacity minus the expected demand — is forecast to drop to the winter’s low on Wednesday, according to Bloomberg models. That reflects plunging wind levels, which will dip below 3 gigawatts, as well as power demand creeping above seasonal norms due to colder weather.

Europe’s largest economy has been hit with multiple windless periods this winter, which has compelled it to either burn fossil fuels or import French electricity. These periods have seen Europe dipping into gas storage at record rates, building fears of how the winter will pan out in the event of more windless periods.

Temperatures in North West Europe are set to remain slightly below seasonal norms this week, pushing up heating demand.

Meanwhile, German year-ahead power prices fell to the lowest level since mid-November as fears about the rapid depletion of gas reserves ease slightly due to the current period of milder, windy weather. That situation looks likely to shift in the coming days, though windy conditions are forecast to return next week.

German day-ahead power prices climbed to €140.50 a megawatt-hour, according to broker data.

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