Day-ahead gas cost € 83.94 per MWh on 15 September. The last time gas was this expensive was on 30 December 2022. Power averaged € 168.61 per MWh in week 37, € 45 more than the week before. In the same week the Dutch government lowered the target for gas storage and the central banks of Europe and the United States raised interest rates. Those four things are connected.
We like to keep you up to date on developments in the energy market. In mid September gas stood above € 80 per MWh for the first time since 2022. Below you can read what happened in gas, power and oil, and why the filling target for gas storage and interest rates changed.
The gas price for delivery the next day rose almost every day in September. On 1 August gas cost € 58.35 per MWh, on 15 September € 83.94. The last day gas was above € 80 was 30 December 2022, at the end of the energy crisis.
The day-ahead gas price, per day from 1 August to 16 September. For six weeks it went almost exclusively up.
The cause lies with the Strait of Hormuz, the strait between Iran and Oman. It has been virtually closed since the outbreak of the war between the United States and Iran at the end of February. Since early August only a single LNG tanker from Qatar has got through. LNG is natural gas that has been liquefied and is transported by ship. As a result the exports of Qatar and the United Arab Emirates, together normally about a fifth of all LNG in the world, have been virtually at a standstill for weeks. Even if the strait opens, about 17 percent of Qatar's export capacity will remain idle, because the Ras Laffan LNG plant was damaged in missile attacks in March.
At the same time Europe has to bid harder for the ships that do sail. They come mainly from the United States and can just as easily go to Asia. Normally Asia pays a few dollars more for LNG than Europe. In September that gap shrank to less than a dollar per million Btu, the unit in which LNG is traded. That keeps the gas price supported.
On 11 September the government lowered the target for Dutch gas storage. These are empty gas fields into which gas is pumped in summer for the winter. On 1 November they were supposed to hold 115 TWh, about 80 percent of what fits in them. The new target is 93 TWh, about 64 percent.
How full Dutch gas storage is, this year versus last year, with the old and the new target as a line. The old target was out of reach at this pace, the new one will be reached in mid-October.
On 15 September Dutch storage held 76.7 TWh, 53.2 percent. On the same day last year it was 68.4 percent. Since 1 September 0.58 TWh a day has been added. At that pace the new target will be reached around 13 October. For the old target 0.81 TWh would have had to be added every day. Across Europe storage was at 68.7 percent, against 80.8 percent last year.
Filling is done by traders and suppliers, and they only do it when it pays. Right now gas for the winter is barely more expensive than gas today, so it does not pay. With a hard filling target the state would have had to step in and buy regardless of the price, and that drives up the price for everyone. On the other hand, gas that is not in the ground on 1 November still has to be bought in winter, at the price of that moment. In an ordinary winter the stock is enough. In a cold winter it gets tight, and tight means expensive.
Power cost an average of € 168.61 per MWh in week 37, against € 122.96 the week before. Over the first sixteen days of September the average was € 157.66, against € 125.41 in August. In 97 hours the price was above € 200, in the whole of August in 33 hours.
The average power price per month since September last year. January, at € 108, was the most expensive month of this year so far. Halfway through, September stands at € 158.
The days are getting shorter and there was little wind. As a result the gas plants have to step in more often. A gas plant burning gas at € 80 needs about € 145 per MWh for fuel alone. On top of that come the CO₂ allowances at around € 85 per tonne. Those are the allowances a plant has to buy for every tonne of CO₂ it emits. As long as such a plant is the last one that has to step in, it sets the price for everyone.
What a megawatt hour of power cost on average, per hour of the day, September versus August. The midday dip has become half as deep and the evening peak a quarter higher.
At 13:00 power cost an average of € 67.33 per MWh in September, against € 30.75 in August. At 19:00 it was € 253.03 against € 193.39. As a result the cheap window in the afternoon is getting smaller and more expensive hours are being added.
A barrel of Brent oil, the benchmark for Europe, costs 105.56 dollars and briefly went above 109 on 14 September. Besides the Strait of Hormuz, Saudi Arabia's detour, a pipeline to the Red Sea, is also under fire. In June almost four million barrels a day still went via that route, in August fewer than two hundred thousand.
The biggest shortage is in diesel. The refineries in the Gulf are behind the closed strait, and Russia has halted diesel exports until the end of October after Ukrainian drone attacks on its refineries. As a result European diesel now costs 75 dollars a barrel more than the crude oil it is made from, against 21 dollars in January.
At the Dutch pump diesel reached a record € 2.819 per litre on 8 April. On 16 September the recommended price was € 2.777. Hauliers pass on a fuel surcharge to their customers every month. That surcharge is rising faster than the oil price, because diesel is rising faster than oil.
On the forward market, where energy for delivery in a later period is traded, power for the whole of 2027 went from € 117.90 to € 127.32 per MWh between 1 and 15 September. Power for peak hours, between 08:00 and 20:00 on working days, went from € 122.12 to € 141.31, almost sixteen percent. Gas for 2027 rose from € 52.29 to € 59.52 per MWh.
| Delivery year | Power | 2 weeks | Peak hours | 2 weeks | Gas | 2 weeks |
|---|---|---|---|---|---|---|
| 2027 | 127,32 | +9,42 | 141,31 | +19,19 | 59,52 | +7,23 |
| 2028 | 96,73 | +4,88 | 104,48 | +8,33 | 36,70 | +2,40 |
| 2029 | 86,45 | +3,90 | 98,94 | +8,07 | 28,80 | +1,34 |
Prices per delivery year in euros per megawatt hour on 15 September, with the change since 1 September. In two weeks, peak hours gained twice as much as the base price.
That puts the peak price for 2027 € 14 above the ordinary price, against just over € 4 two weeks earlier. The tightness is during the day and in the evening, when the sun delivers little in winter and businesses are running. Anyone who mainly uses power during the day will therefore see their purchase price rise faster. For 2029 power costs € 86.45 per MWh, so the market attributes the tightness mainly to next year.
On 10 September the European Central Bank (ECB) raised its rate to 2.50 percent. On 16 September the American central bank, the Fed, followed with a rise to 3.75 to 4 percent, the first since July 2023.
Both decisions cite energy as a reason. Inflation in the eurozone stands at 3.3 percent, and energy, with a rise of 14 percent in a year, is the largest item in it. Nine months ago the market was still counting on three rate cuts in 2026. As long as oil is above 100 dollars and gas above 80 euros, those will not come.
That feeds back into the energy market. Suppliers who fix gas and power for you have to deposit collateral with the exchange, and they borrow that money. Those higher costs come back in the price of a fixed contract. In addition, wind farms, solar parks and LNG terminals become more expensive to build, and that keeps the market tight for longer.
We expect the situation around the Strait of Hormuz to remain unresolved at least until the American elections in November, with small crises in between. As a result gas and power prices will stay high this winter, and interest rates will stay higher than was thought at the start of the year.
Is your contract ending in the coming months, or would you like to know what these developments mean for your energy costs? Then get in touch with us. Using your own figures, we work out how much of your consumption falls in the expensive hours and what a cold winter does to your costs.
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