Market outlook
The first quarter of 2025 is history. Time to take an initial look back and categorise market developments to date. Important factors were the mild winter, lower gas prices and weakening prices for emission allowances. Nevertheless, the electricity spot market increased significantly compared to the same quarter of the previous year.
March 2025
Gas
The gas market showed the greatest volatility among commodities in Q1: The front year delivered a trading range between EUR 33 and 46/MWh. Overall, it has lost around EUR 5/MWh since the beginning of the year and slipped from EUR 41 to EUR 36/MWh. The influences that have led to a reduction in the risk premium are manifold: reliable LNG deliveries, a stable gas supply from Norway and, in particular, the relatively mild winter of 2024/2025. Although the winter was around 2 degrees cooler than the winter of 2023/2024, it is still one of the mild winters - the 14th in a row, by the way.
Electricity front year and emission certificates
Since the beginning of the year, the front year base has spanned a trading range between EUR 80 and 102/MWh and has also lost around EUR 7/MWh since the beginning of the year. The close correlation with the gas price has remained, meaning that the price slide on the gas market in Q1 had a direct impact on the electricity price.
The weakening price for European Union Allowances (EUA) is also reflected in lower electricity prices: Since the beginning of the year, the EUA Dec-25 product has shed €2. With a trading range between 67 and 84 EUR/t, the EUA market was similarly volatile to the gas market.
Electricity spot market
However, there is one market to watch particularly closely in Q1 2025 - the electricity spot market. Compared to Q1 2024, a completely different, higher level has been established here: While the average spot price in Q1 2024 was still at EUR 68.5/MWh, it is around EUR 114/MWh in Q1 2025. This is an increase of 66 per cent compared to the previous year. There are two main reasons for this price increase: Gas spot prices traded between 22-36 EUR/MWh in Q1 2024 and between 35.5-60 EUR/MWh in Q1 2025 and the share of renewables in electricity production was around 10 per cent lower in this quarter than in 2024.
Outlook
At a level of around 29 per cent, the filling of gas storage facilities will now begin at the end of March/beginning of April. As the filling level is around 30 per cent lower than in the previous year, gas spot prices will probably show little weakness in the summer of 2025 - filling gas storage facilities by November will provide significant support for the price.
Geopolitical events have an impact on all commodities. Talks about a ceasefire between Russia and Ukraine are fuelling speculation about the commissioning of the one Northstream pipeline that is still intact and corresponding gas supplies from Russia to Europe. Even if this scenario is not very realistic, prices are moving on the back of this news. The attack on a gas compressor station in Sudzha also had an impact on the gas price. The outlook suggests that the market will remain volatile.
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