DUBAI (Dispatches) - European power prices jumped to the highest levels in over a decade, as natural gas, coal and carbon rally, a new Bank of America (BofA) report said.
Prompt-month baseload futures topped 100 euros ($118.8) per megawatt-hour (MWh), the report said, while day-ahead prices in Spain and the UK broke through 120 euros per MWh.
Demand in Italy was particularly strong because of hotter temperatures, while Spain saw a drop in demand in July to the lowest season level since 2014.
The jump in prices was principally driven by a “historic rally across the European energy complex and a sluggish renewable generation.”
European natural gas, coal, and carbon prices have at least doubled from last year’s levels, the report indicated.
“We continue to see asymmetric upside risk to European natural gas prices throughout this winter and potentially next summer given the current low inventory environment,” Francisco Blanch, commodity and derivative strategist of BofA Europe, said.
A decline in renewable generation, led by a slowdown in wind utilization, has also contributed to rising power prices across Europe.