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This broadcast ...

... says:

The wholesale price for 2022 was €85 per MWh and the price for 2023 has gone up to over €1000.

Is that true? That is a pretty big jump.

Is it comparing like-to-like -- or is that comparing apples-to-oranges? For example was €85 an average price whereas €1000 is something else, perhaps a marginal price or a price during peak demand?

I note that 2023 doesn't exist yet so I guess that €1000 is some kind of "futures" price? Is there much trade now happening at that price, or does it just mean that no seller currently wants to guarantee a future price, so they're asking a sky-is-the-limit amount that very few would actually buy at?

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    I don't think this is a question for skeptics... it was all the news of last week that gas prices went to about 1000€/MWh and are right now at ~200€/MWh which is already like 4x the price of last year... there's nothing to be skeptic about this. This question is more likely to be answered in politics.SE or economics.SE
    – Bakuriu
    Sep 4 at 8:07
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    @Bakuriu Electricity not gas. And it is sensational, and reported (notable), but I was hoping someone could explain what's behind the headline. Also many of my answers on Skeptics have been along the lines of, "It's superficially true that he said that but that's not what he meant in the context", I think it's on-topic to explain the truth behind the story -- I'd like to understand the context in which it's true. Because I still doubt that e.g. the price which we (i.e. consumers or the government's price-capping subsidies to consumers) will pay for electricity will increase 500% (or will we?).
    – ChrisW
    Sep 4 at 8:22
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    @ChrisW FYI in many countries there is a single electricity price which means a gas price increase is a direct increase in energy price, even for energy produced by wind & solar. Anyway, I think your question would fit better on economics.SE than on skeptics.SE. There is skepticism related to what the energy/gas prices are in the EU. This is all public and well documented. If you want explanations of why this happened you want to ask to an economist about the energy market.
    – Bakuriu
    Sep 4 at 19:35
  • @Bakuriu My question is about France which is ~80% nuclear. My skepticism is, a) is there a source which says that 2023 prices are €1000; b) what kind of price precisely does that refer to (e.g. according to this today's price allegedly varied between €400 and €600 depending on time-of-day); and c) is that comparable to the €85 which they claimed it was in 2022, and/or how is it qualitatively different.
    – ChrisW
    Sep 6 at 18:56

1 Answer 1

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Electricity FUTURES did hit that price. Here's an example graph.

French FEB23 futures

ICE in this context are a major futures market, so that's "legit" in the sense that it appears that trading around this price really has happened.

The next question is: what does that actually mean?

Futures markets can occasionally go bananas. They may be thinly traded. Sometimes there is buying in the run-up simply because you think you can resell to someone closer to the peak. Sometimes there are attempts to "corner" a market (e.g. silver, onions, aluminium) - although that works very differently here because you can't store vast quantities of electricity for months.

But it does mean that a lot of people were worried that French electricity would hit extremely high prices.

The French government has declared its intention to re-take EDF into full public ownership (it was already 80%) and stabilize bills. This will probably work assuming that the nuclear power station servicing can be completed and no further serious problems are discovered.

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  • Ok thanks for the answer and the reference. That's quite the spike (to 2000). My initial reaction was that "today's price" and "the futures market" aren't comparable. But I guess they're related at least, in that an end-user must choose to buy sometime, and they have a choice -- maybe a fairly continuous spectrum of choice -- re. whether to buy in advance (on the futures market) or at the last minute (at today's price).
    – ChrisW
    Sep 8 at 18:16
  • How can there even be a futures market for electricity when the capacity to store large amounts of electricity for several months is not yet in place?
    – gerrit
    6 hours ago

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