Less cold temperatures and more wind energy lower European electricity market prices, but they remain above €100/MWh

AleaSoft Energy Forecasting, January 27, 2025. In the fourth week of January, prices in the main European electricity markets fell compared to those of the previous week. Despite the declines, weekly averages were above €100/MWh in most markets, and many reached the highest daily price since at least the beginning of 2024. Declining demand due to less cold temperatures, as well as higher wind energy production favored the price declines, even though gas and CO2 prices increased. CO2 futures reached the highest settlement price since late 2023.

Solar photovoltaic and wind energy production

In the week of January 20, solar photovoltaic energy production increased in the Italian electricity market compared to the previous week by 6.2%, maintaining the upward trend for the second consecutive week. On this occasion, the German, French, Spanish and Portuguese markets registered a decrease in production with this technology, after the increases of the previous week. The German market registered the smallest decline, 4.1%, while the Portuguese market showed the largest decrease, 63%. The French and Spanish markets registered declines of 36% and 54%, respectively.

For the week of January 27, AleaSoft Energy Forecasting’s solar energy production forecasts indicate an increase in production in the Spanish, German and Italian markets.

AleaSoft - Photovoltaic energy production electricity EuropeSource: Prepared by AleaSoft Energy Forecasting using data from ENTSO-E, RTE, REN, REE and TERNA.
AleaSoft - Solar photovoltaic production profile EuropeSource: Prepared by AleaSoft Energy Forecasting using data from ENTSO-E, RTE, REN, REE and TERNA.

In the fourth week of 2025, wind energy production increased in most major European markets compared to the previous week, experiencing a trend reversal following the previous week’s declines. The French market registered the largest increase, 235%, while the Portuguese market had the smallest increase, 48%. The Spanish and German markets registered increases of 77% and 100%, respectively. On the other hand, the Italian market showed declines for the second consecutive week, this time reaching 43%.

For the last week of January, according to AleaSoft Energy Forecasting’s wind energy production forecasts, production will increase in the Spanish and Italian markets, while the Portuguese, French and German markets will show decreases in wind energy generation.
AleaSoft - Wind energy production electricity EuropeSource: Prepared by AleaSoft Energy Forecasting using data from ENTSO-E, RTE, REN, REE and TERNA.

Electricity demand

In the week of January 20, electricity demand fell in most major European electricity markets compared to the previous week. The French market registered the largest drop, 11%, while the British market registered the smallest decline, 1.3%. The Italian, Belgian, German, Spanish and Dutch markets registered declines ranging from 1.5% in Italy to 5.2% in the Netherlands. The Portuguese market was the exception, with a 0.4% increase in demand compared to the week of January 13.

Most markets showed a downward trend change in the evolution of electricity demand, except for the British and Portuguese markets. The British market continued its downward trend for the second week, while the Portuguese market maintained its upward trend for the fourth consecutive week.

During the week, average temperatures were less cold than the previous week in most markets. Average temperature increases ranged from 1.5 °C in the Netherlands to 4.7 °C in Spain. This increase in average temperatures favored lower demand in most markets. On the other hand, the British market registered colder average temperatures than the previous week, with a decrease of 1.0 °C compared to the previous week.

For the last week of January, AleaSoft Energy Forecasting’s demand forecasts expect a mixed behavior. In the markets of Germany, Great Britain, Spain and the Netherlands, demand will increase. On the other hand, in the markets of France, Portugal, Belgium and Italy, demand will decrease.


AleaSoft - Electricity demand European countriesSource: Prepared by AleaSoft Energy Forecasting using data from ENTSO-E, RTE, REN, REE, TERNA, National Grid and ELIA.

European electricity markets

In the fourth week of January, average prices in most major European electricity markets declined. The exceptions were the IPEX market of Italy, the N2EX market of the United Kingdom and the Nord Pool market of the Nordic countries, with increases of 4.4%, 26% and 164%, respectively. The MIBEL market of Spain and Portugal registered the largest percentage price drop, 23%. In the rest of the markets analyzed at AleaSoft Energy Forecasting, prices fell between 8.1% in the EPEX SPOT market of the Netherlands and 18% in the EPEX SPOT market of France.

In the week of January 20, weekly averages exceeded €100/MWh in almost all analyzed European electricity markets. The exception was the Nordic market, which registered the lowest average, €56.09/MWh. The Italian and British markets reached the highest weekly averages, €153.97/MWh and €166.96/MWh, respectively. In the rest of the analyzed markets, prices ranged from €102.91/MWh in the Portuguese market to €134.98/MWh in the German market.

Regarding daily prices, in the fourth week of January, most analyzed electricity markets reached their highest prices on Monday, January 20, falling during the following days of the week. The exceptions were the Nordic and British markets, which registered their highest prices of the week on January 22. On Monday, January 20, daily prices exceeded €200/MWh in the German, Belgian, British and Dutch markets. On that day, the Italian and French markets reached their highest daily prices since January 25, 2023, which were €192.84/MWh and €196.71/MWh, respectively. On the other hand, on January 22, the British market reached the highest price of the week, €309.01/MWh. This was also its highest price since December 17, 2022. In the case of the Nordic market, on that day it reached its highest price since January 6, 2024, €129.14/MWh.

In the week of January 20, despite the increase in gas and CO2 emission allowance prices, the fall in demand and the increase in wind energy production led to a fall in prices in most European electricity markets. However, wind energy production decreased in Italy, contributing to the price increase in this market.


AleaSoft - Solar Wind Farm

AleaSoft Energy Forecasting’s price forecasts indicate that, in the last week of January, prices will fall again in the European electricity markets, influenced by the rise in solar energy production and the increase in wind energy production in markets such as Spain and Italy. In addition, demand will fall in some markets.


AleaSoft - European electricity market pricesSource: Prepared by AleaSoft Energy Forecasting using data from OMIE, EPEX SPOT, Nord Pool and GME.

Brent, fuels and CO2

In the fourth week of January, settlement prices of Brent oil futures for the Front‑Month in the ICE market continued the downward trend that had started on Thursday of the previous week. On Monday, January 20, these futures reached their weekly maximum settlement price, $80.15/bbl. After the price declines, on Thursday, January 23, these futures registered their weekly minimum settlement price, $78.29/bbl. However, on Friday, January 24, there was a slight recovery and the settlement price was $78.50/bbl. According to data analyzed at AleaSoft Energy Forecasting, this price was still 2.8% lower than the previous Friday.

The ceasefire agreement between Israel and Hamas, which eased supply concerns, as well as the prospect of higher US production, contributed to the decline in Brent oil futures prices in the fourth week of January.

As for settlement prices of TTF gas futures in the ICE market for the Front‑Month, they increased in most sessions of the fourth week of January. On Monday, January 20, they registered their weekly minimum settlement price, €47.85/MWh. On Tuesday, January 21, they registered a price increase of 4.5% compared to Monday. On that day, they reached their weekly maximum settlement price, €50.03/MWh. According to data analyzed at AleaSoft Energy Forecasting, this price was the highest since January 3, 2025. The following day, January 22, the settlement price fell by 2.6% compared to the previous day, but, in the last sessions of the week, prices rose again. As a result, on Friday, January 24, the settlement price was €49.70/MWh, 6.0% higher than the previous Friday.

The decline in European reserves, as well as the interruption of Russian gas supplies through Ukraine, continued to drive prices higher in the fourth week of January. However, the diversion of some liquefied natural gas cargoes to Europe limited the price increase.

Regarding settlement prices of CO2 emission allowance futures in the EEX market for the reference contract of December 2025, they increased in almost all sessions in the fourth week of January, except on the 22nd. On that day, these futures registered their weekly minimum settlement price, €78.94/t. As a result of the upward trend, on Friday, January 24, these futures registered their weekly maximum settlement price, €81.67/t. According to data analyzed at AleaSoft Energy Forecasting, this price was 3.0% higher than the previous Friday and the highest since December 30, 2023.


AleaSoft - Prices gas coal Brent oil CO2Source: Prepared by AleaSoft Energy Forecasting using data from ICE and EEX.

AleaSoft Energy Forecasting’s analysis on the prospects for energy markets and energy storage in Europe

The 51st webinar of AleaSoft Energy Forecasting took place on Thursday, January 16. The event featured speakers from PwC Spain for the fifth time in the monthly webinar series. In addition to the evolution and prospects of European energy markets, the webinar analyzed the prospects for energy storage and hybridization, industry electrification, the current state of regulation on PPA and renewable energy, as well as virtual PPA and FPA (Flexibility Purchase Agreements).

On Thursday, February 13, AleaSoft Energy Forecasting will hold its 52nd webinar. This webinar will feature Tomás García, Senior Director of Energy & Infrastructure Advisory at JLL. On this occasion, the webinar will analyze the evolution and prospects of European energy markets, as well as the “contracted revenues” for BESS projects, through the capacity market and Optimizer Agreements.

 

Source: AleaSoft Energy Forecasting.

 

Subscription to AleaSoft