Gas could drop to 25 euros per megawatt hour in two months due to decreased demand

The energy consultancy Tempo Energía has advanced this Wednesday that the price of natural gas could fall below 25 euros per megawatt/hour (MWh) in a maximum horizon of two months, a fall caused, to a large extent, by the decrease in demand, both internal and external, and the drive for green energy, such as solar.

“With gas at 25 euros per megawatt/hour and CO2 at 80 euros per ton, the pool outside of solar hours could reach 85 euros per megawatt/hour, leaving the figure of a duckbill or great cannon with a average price of around 30 euros/MWh. This drop would govern the time window from 9:00 a.m. to 6:00 p.m.,” said the general director of the strategy, Antonio Aceituno.

As he explained, “although it is true that we are about to start the summer season, the demand for heating should end shortly, causing a significant drop in consumption, and China, one of the large traditional consumers of gas, is betting on coal to avoid hand-to-hand with Europe in the battle for Liquefied Natural Gas (LNG)”.

Added to this is that LNG inventories are currently at 60%, which means that the European Union would reach the target of 90% storage, or even 100%, well before the heating season, late August or early September.

Aceituno has also highlighted the 11% drop in electricity demand during the month of April and May has started with “a surprising 9% drop compared to March, placing consumption levels at rates practically equal to those of the pandemic “.

However, the general director of Tempos wanted to emphasize that the electricity market continues to show signs of competitiveness, with the monthly average since March trading below 90 euros per megawatt hour.

“The sky is shining above the pool of our country”. “The duckbill or grand canyon curve continues to appear stably in the hourly price curve since March,” said Aceituno, who highlighted that the entry between 08:00 and 09:00 hours yields an average of 108, 60 euros/MWh, leaving the Grand Canyon at around 10:00 p.m. with a price of 126.71 euros/MWh.

For the expert, what is really interesting is to observe how the pool collapses at 5:00 p.m., reaching average levels of 24 and 44 euros per megawatt hour in the months of April and May, respectively.. “A great drop of 84 euros per megawatt hour, that is, 78%, and 64 euros per megawatt hour, -59% percent for these periods.