Natural gas and wind compete more and more

Winter weather conditions have been more than favourable for the European gas market this year. In addition to several cold snaps, which resulted in a notable increase in residential and commercial heating demand as compared to early 2020, another important component of the weather factor has also played its part.

The wind speed in the region was far below 2020 levels in the first months of this year. If there were 28 days between Jan and Feb 20 when the wind in NWE was blowing slower than the 30-year average, the figure for 2021 stood at 48. As a consequence, electricity production from wind power in Germany dropped by over one third YoY, strengthening the positions of competing energy source.

With the changes in European energy landscape, natgas and renewables are becoming increasingly intertwined with each other. The rapid expansion of wind power capacities, as well as PV installations, offers potential for higher gas sales, especially at times of rising heating and cooling demand.

The same logic works in the opposite direction either: there is much less space for gas during periods when the right weather conditions contribute to maximisation of wind and solar energy production.

Source: Yakov Grabar

See original post by Yakov at LinkedIn.