Europe's Energy Prices Hit New Record Highs As Cold Snap Arrives

Europe's Energy Prices Hit New Record Highs As Cold Snap Arrives

TYLER DURDEN

Update (0853ET): Europe's energy crisis worsened Monday as the Northern Hemisphere winter is about to begin. Colder weather plagued parts of Europe with zero degrees Celsius, straining electricity grids already dealing with unreliable green energy sources (such as low wind power generation) and nuclear power plant outages in France. 

Let's begin and take a look at soaring day-ahead electricity prices across Europe. Bloomberg's Chief Energy Correspondent Javier Blas pointed out, "electricity prices across much of Europe set fresh and frightening record highs."

Blas pointed out that German day-ahead electricity prices are at 431 euros per megawatt-hour, a record high. 

Germany is an economic powerhouse on the continent, and high power prices could force energy-intensive industries to shutter operations and re-sell their power on spot markets. 

In France, several nuclear power plants have reduced output due to safety woes and a worker strike, straining the grid and sending power prices to decade highs. 

This year, energy prices have soared, with European natural gas prices surging more than 600%. The region's benchmark gas contract rose by 8.8% early Monday. 

With more nuclear power plant outages and unreliable green energy, electricity producers will use more gas to produce energy. However, supply constraints persist as the amount of gas entering Germany at the Mallnow compressor station collapsed over the weekend; storage tanks on the continent are only 60% filled, a record low for this time of year.

Europe's energy crisis appears far from over as market tightness and colder weather will continue pushing up power prices that will strain households and businesses. 

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