Power market prices in Europe, the United Kingdom and Türkiye reached historic levels due to record-breaking natural gas prices from the worsening energy crisis during the past year, data compiled by Anadolu Agency showed.
The first impacts of the energy crisis started one year ago, caused by the global economic recovery post-COVID-19 and gas supply and demand imbalances.
The price of futures contracts per megawatt-hour in Europe, trading on the Dutch-based virtual natural gas trading point (TTF), rose from the level of €30 ($30.05) at the beginning of September last year to €87 ($87.15) on Feb. 23, one day before Russia started the war in Ukraine.
However, gas prices saw a gigantic increase, trading at €346 ($346.59) per megawatt-hour in late August, marking a 1,000% rise over the previous year.
As natural gas accounts for almost a quarter of Europe's and almost a third of Türkiye's electricity generation, high gas prices together with coal prices have been reflected in spot market power prices.
Gas prices are the determinant factor in electricity prices, which are now the most expensive electricity generation source, Ufuk Alparslan, the regional lead of Türkiye, Ukraine and the Western Balkans at Ember, a London-based think tank, told Anadolu Agency.
"Electricity price increases have become inevitable even in countries with a high share of wind and solar in their electricity generation mix, as these are the cheap sources," Alparslan noted.
Ember data shows that the average price of one megawatt-hour of electricity in France increased 537.4% between August last year and August this year. The average price per megawatt-hour rose from €77.40 ($77.52) to €492.99 ($493.78) over this period.
In Germany, the average price increased by 466.7% during the same period, from €82.81 ($82.93) to €469.35 ($470.03) per megawatt-hour.
Italy's spot power markets saw a jump of 382.4% in a year as the average price per megawatt-hour hit €543.48 ($544.20) from €112.66 ($112.80).
Power prices in Spain reached €154.99 ($155.15) per megawatt-hour, up 46.2% from its €106 ($106.11) level in August 2021. The increase in power prices was comparatively limited as the country put a cap on the price of natural gas consumed for electricity generation after the power prices hit €283 ($283.29) per megawatt-hour in March 2022.
In the United Kingdom, power market prices stood at an average of £106.83 ($122.07) per megawatt-hour in August 2021, but mounted 246.6% to £370.28 ($423.09) per megawatt-hour in August 2022, according to Nord Pool data.
Turkish power market prices reached 3,066 Turkish liras ($167.45) in August 2022 from 557 Turkish liras ($30.42) in August 2021, marking a 450.4% increase in a year, Energy Exchange Istanbul (EXIST) data showed.
Alparslan attributed the record high fossil fuel prices combined with high exchange rates to the increase in power market prices in Türkiye.
"Futures contracts in natural gas prices in Europe are expected to remain high until at least 2025. Thus, high power prices are also expected to persist in the coming a few years," he said.
He also noted that European Union countries plan to change the design of electricity markets either temporary or permanently due to the ongoing high electricity prices.