A report in the Wall Street Journal (WSJ) on February 13th (local time) noted that energy prices in Europe had been trending upwards, but they had spiked again after the North Sea wind farm stopped running.
Since the winds in the North Sea have calmed in recent weeks, offshore wind farms have almost stopped operating, which has shaken the European energy market.
In order to make up for the lack of wind power, natural gas and coal-fired power plants were brought back online. As a result, natural gas prices, which were already on the rise, reached record highs.
Additionally, coal, which had long been shunned because of carbon dioxide (CO2) emissions, re-entered the market after a long period of stagnation as thermal power plants resumed operation.
Particularly as winter approaches in Europe, a sharp decline in wind power generation is expected to increase the volatility of the energy market.
The UK has the highest cost of electricity. Wind power is at the center of UK climate response. Electricity prices in the UK have more than doubled over the past month, reaching their highest level. In comparison to this time last year, they are seven times higher. The UK electricity price rose to £285 per megawatt hour last week as the wind speed dropped. Wind power, including the massive North Sea wind farm, is one of the principal drivers of the UK’s goal to achieve net zero carbon emissions by 2050.
Last year, wind power contributed 25 percent to the UK’s electricity generation, according to National Grid, the operator of the British electricity system. National Grid restarted the West Burton A thermal power station in Nottinghamshire when the wind died down this month.
Prices have also risen on the French, Dutch, and German electricity markets. The price of carbon credits in Europe has reached a record high as wind power plants have virtually been shut down and coal-fired power plants have returned online.
The rise in electricity prices was a surprise to many, according to Stefan Konstantinov, senior energy economist at data provider ICIS.
The economy is being affected by rising energy prices. A monetary policy meeting on the 9th, hosted by the European Central Bank’s (ECB) Christine Lagarde, is seen as the backdrop for the decision to phase out bond purchases.