Quarterly market analysis on gas and electricity markets 2024
The times of the energy crisis in the European Union now seem far away. After a turbulent 2022 and a 2023 of ups and downs, the gas and electricity markets 2024 seem to have reached an apparent stability. In the year’s first quarter, prices returned to more contained levels, volatility eased, renewables performed at their best, and imports decreased. Making the whole landscape decidedly more predictable. And despite experts in the field urging not to let our guard down, the overall situation seems quite rosy.
The European Commission itself provides a detailed overview of the community energy markets, publishing new reports dedicated to the gas and electricity sectors. Let’s look at how the markets are moving in the Old Continent.
The gas markets in 2024
The European Commission writes that “the fundamentals of the gas market remained strong ” in the first three months of 2024. This is due to several factors, starting with consistently high storage levels, stable supplies from pipelines and LNG, and a significant drop in wholesale and retail prices. Lower consumption has also influenced the solidity, in line with the EU’s energy-saving commitments and the increased share of renewable energy sources.
Gas consumption 2024
The demand for gas in the first quarter of 2024 was 111 bcm (billion cubic meters), showing a decrease of 2% compared to the previous year and an increase of 16% compared to the previous quarter, reflecting the normal winter trend. With the highest quarterly increase in Latvia (+41%). Compared to the year-on-year consumption data, 13 member states recorded an increase ranging from a minimum of 2% in Luxembourg to 49% in Finland. For others, including Italy, a decline has been highlighted within a range of 0.5% to 10%.
The five largest gas consumers in the EU? In the first quarter of 2024, the countries were Germany (27 billion cubic meters), Italy (20 billion cubic meters), France (12 billion cubic meters), the Netherlands (11 billion cubic meters), and Spain (8 billion di cubic meters).
Gas production
The EU’s gas production remained stable compared to the previous quarter, with 8 billion cubic meters supplied internally. However, the data shows a decrease of 26% compared to last year. The Netherlands remains the largest producer, accounting for a third of the EU’s production (2.7 billion cubic meters, 33%), followed by Romania (2.4 billion cubic meters, 29%) and Germany (1 billion cubic meters, 1%).
Gas import
The lower consumption has allowed the EU market to record a 5% decrease in imports compared to the previous quarter, totalling 70 bcm. Compared to the first three months of 2022, however, the situation appears relatively stable with a decrease of only 1%. Of the total, 19% came from Russia.
Going into detail, imports are divided into 59% coming from pipelines (equivalent to 41 bcm) and 41% from foreign liquefied natural gas (29 bcm), half of which is U.S. LNG. The data on LNG confirms the European Union’s undisputed role as the world’s largest importer of liquefied natural gas. Positioning itself even in front of China and Japan.
Gas reserves
Gas storage levels in the EU have decreased by 29%, from 95% to 68%, as a quarterly average, reflecting higher withdrawals during the winter season. On an annual basis, however, the fill rate was 1 percentage point higher compared to the same period last year (67%), with a trend consistently above the average of historical levels.
The price of gas in 2024
In the first three months, European wholesale gas prices averaged 27.3 euros/MWh, down 33% from the previous quarter and 49% from last year. In detail, February 2024 recorded the minimum price at 25.7 euros/MWh, comparable to a pre-war price level. (ma non pre-rincari).
The EU electricity markets 2024
The EU report highlights a new decline in prices in European electricity markets for the first quarter of this year, along with an increase in clean energy shares. Unlike the EU gas markets, in this case, the situation still seems very far from the pre-energy crisis levels.
Electricity consumption
From January to March 2024, electricity consumption in the Bloc increased only slightly (+1%) compared to the levels of the first quarter of 2023, reaching 649 TWh. Overall, indeed, industrial electricity demand remains low due to the prolonged effects of the energy crisis, as well as the demand for heating, in this case due to warmer winter temperatures.
Electricity production 2024
Almost all European electricity markets have recorded a significant increase in the share of renewables, which at the community level reached 46% of the European production mix in the first three months of the year. Paris at 312 TWh. Leading the green race: photovoltaic and wind energy with an overall +11% in generation in the first quarter of 2024 (+18 TWh), supported by higher levels of installed capacity. Hydroelectric energy has also increased production by 26% (+22 TWh).
Electricity from fossil fuels decreased by 25% in the first quarter of 2024, totaling 130 TWh fed into the grid. In total, coal generation has reduced by 34% (-17 TWh), while gas-fired electricity production has decreased by 8%. (-8 TWh).
The contribution of nuclear energy has increased by 4%, reaching a total of 166 TWh, due to the restart of some French plants that were previously closed for maintenance work.
Electricity prices 2024
The average wholesale electricity prices in the day-ahead market in Europe were 44% lower compared to the first quarter of 2023 and 21% lower than in the last quarter of 2023. Fundamental market factors, lower gas prices, increased renewable energy production, and moderate electricity demand have contributed to the decline. The European Power Benchmark recorded an average of 67 euros/MWh, with national averages ranging from a low of 44 and 45 euros/MWh in Portugal and Spain to a high of 92 euros/MWh in Italy.
Retail electricity prices for EU households decreased by 13% in the first quarter of 2024 compared to the first quarter of 2023, supported by a drop in wholesale prices. Prices for industrial users have also decreased, but to a lesser extent. Another noteworthy point: The number of hours with negative wholesale prices in the first quarter of 2024 was higher compared to the same quarter in 2023.
Carbon prices
The report on the European electricity market also includes a chapter on carbon prices, which have decreased for most of the first quarter of 2024, reaching lows around 50 euros/tCO2 by the end of February 2024. The average quarterly price of 62 euros/tCO2 represented a decrease of 31% compared to the first quarter of 2023.