Exchange prices for electricity and gas have been falling for several weeks now. Customers of Stadtwerke Gießen are already benefiting from this development.
Numerous media have reported on a thoroughly positive development in recent days and weeks: the times of astronomically high prices for energy seem to be over. At least that is what the current market prices for electricity and natural gas suggest. They have fallen noticeably and are currently stabilising at a level that experts were able to observe even before the crisis began - not over a longer period of time, but from time to time.
The experts at Stadtwerke Gießen (SWG) have been closely monitoring this trend since the beginning of the year and have already taken action. "We are following the market trend. Just as we always do. This means that we lower our prices as soon as the procurement situation allows," explains Jens Schmidt, Commercial Director of SWG. In fact, SWG customers have been paying significantly less for electricity since 1 May. The reduction in gas prices has already been communicated and is due to take effect on 1 July. "This means that we are below the price brakes for both electricity and natural gas," explains Jens Schmidt.
Some background information
There are various reasons for the current, thoroughly positive price trend. "The mild winter was certainly a decisive factor," says Olaf Volkmer, Head of Energy Purchasing & Trading. Another important factor is the economical use of natural gas during the cold season. This is now having a lasting effect and is making a significant contribution to natural gas becoming cheaper again. Only thanks to the massive reduction in consumption in industry and households were the natural gas storage facilities still well filled last April at around 64 per cent - in contrast to just under 25 per cent in April 2022. Currently, the storage facilities are already around three quarters full. And that is precisely what is influencing prices. "Contrary to the rightly cautious assessment, Germany will not have to procure as much expensive liquid gas this summer as feared in order to replenish stocks for the coming winter," continues Olaf Volkmer.
Experts expect German gas storage facilities to reach their maximum levels as early as September. Unlike a year ago, when Russia successively reduced its gas exports to zero, from today's perspective this does not require any extraordinary efforts - neither organisational nor financial. "All of this has a direct impact on the availability of gas and therefore on its price," explains Olaf Volkmer, adding: "Basically, we as a company are now reaping the rewards of our joint efforts last winter."
Energy traders are also seeing a downward trend in electricity prices. Their decline is due to the continued close link between electricity and gas prices. Keyword merit order. This principle means that cheaper producers have priority over more expensive ones in this country. However, this also means that the most expensive power plant still producing determines the price. Because the coveted fuel is once again available at reasonable prices, especially on the spot market, power plants that run on natural gas have practically forced those that generate electricity using hard coal out of the market. "Currently, gas-fired power plants can even compete with lignite-fired power plants again in terms of price," says Olaf Volkmer.
Cautious optimism
Olaf Volkmer - and many experts with him - assume that the situation will continue to ease. However, no one can seriously predict whether this trend will continue and for how long. A certain risk remains. After all, the distortions in the energy market have by no means normalised. The fact that Germany has significantly diversified its sources of supply for natural gas in the past year should not obscure this. "The snapshot is positive. But a really cold and long winter can quickly change the situation," Olaf Volkmer points out. That's why the gas emergency plan is still on alert.
For precisely this reason, the imperative to save energy will remain in place for the foreseeable future. If only because energy still costs significantly more than before the crisis - and is likely to remain more expensive. An equally good argument in favour of saving is that less demand usually results in lower prices. Over the past few months, this age-old market economy principle has worked like something out of a textbook. There is every indication that it will also prove its worth in the coming winter. This gives cause for cautious optimism: "Just like the market rules, SWG can also be relied upon. We will continue to offer our customers fair prices in the future," promises Jens Schmidt.