German benchmark power prices hit 11 year low

German power prices have extended their long-term losses to hit an 11 year low on the wholesale power market, according to energy price reporters.

Market experts at Platts said the benchmark forward price for next-year delivery has slipped below the €31/MWh mark for the first time since 2004, and could have fallen even lower without support from rising carbon prices through the EU’s emissions trading system.

Last week RWE and Eon, Germany’s dominant energy companies and parent companies to two of the UK’s big six, posted heavy losses in their first half financial reports, in large part due to lower wholesale prices.

RWE said its 11 per cent operating losses to €2 billion for H1 were mostly as a result of continued decline in profit margins from its conventional generation fleet.

The heavy losses from RWE came one day after Eon reported losses significantly below expectations of 29 per cent from its generation earnings, prompting the company to call on the German government to offer clear support for conventional power plants.

German generation earnings have come under pressure in recent years as a result of a continued weakness in the German wholesale power price following the strong deployment of renewable energy into the market as part of Germany’s energy transition.