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High German Power Shows Risk Premium Over Gas

ELECTRICITY

The energy crisis has triggered a decoupling of German power prices from gas prices according to Bloomberg Research.

  • The research shows German power prices for 2023 are pricing in a risk premium of 276 euros/MWh. The market expects a supply shortfall and fuel-switching this winter
  • They expect the less-efficient operators to set the marginal price this winter. Germany’s implied efficiency drops to an average of 42% suggesting coal and peaking plants are likely to set the price this winter.

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