It is a strange summer. On the one hand, there is a high temperature gradient across the European continent – after midsummer weather, spring-like instability has set in with a mix of wind, rain, and sun in Central Europe. Meanwhile, other regions are affected by extreme heat. On the other hand, there is hardly any sign of the summer slump, especially not politically. Nothing less than the future of the energy industry is at stake. Infrastructure must be built, laws rewritten, networks established, their costs administered, and their future viability preserved with visionary foresight.
The political debate surrounding grid costs is becoming increasingly heated in many European countries. Quote from the German Association of Industrial Energy and Power Industry: “The future grid fee system should remove barriers to flexibility. (…). In general, the reform project should focus on reducing grid costs by providing incentives for behavior that benefits the system (…); simply redistributing costs between different grid user groups is not enough.” In many countries, we are seeing plans to change the existing regulations for grid control, which will have an impact on grid costs. However, this is happening in a rather sequential manner and often not holistically with regard to the effects on all grid players, which in turn results in higher administrative costs and higher grid costs for all consumption units. Dealing with PV surpluses is one of the most critical issues for this future grid infrastructure. European examples of political adjustments to this grid system:
Let’s start with Bulgaria: Combined accounting groups will be abolished there as of July 1. The effects on rolled-over balancing energy costs are being discussed in different ways and must first be observed.
In Romania, a regulation was passed on July 8 that exempts batteries from grid costs and GOOs (guarantees of origin) for electricity procurement. PV systems with a capacity of more than 10.8 kW to 400 kW must be equipped with storage systems.
In Croatia, a law on renewable energies and CHP came into force in April, changing the way surplus electricity is billed. At the same time, a law on the establishment of energy communities is to be passed in the summer of 2025.
Slovenia already implemented a major reform last year. Things are also getting complicated there: the Agencija za energijo (Slovenia’s energy regulator) is introducing a main and a secondary season, each with different grid prices. In addition, the day will be divided into five time blocks and a new performance-based tariff component will be introduced. In addition, an annual capacity is agreed for each delivery point, which is intended to ensure a cost-based distribution of grid costs.
Germany is facing a difficult period of change, partly because grid fees have been avoided for some consumer groups up to now. Many of the proposals on the table do not meet the aforementioned requirement for simple fee structures and the removal of barriers to flexibility.
Last but not least, Austria has also attracted a lot of media attention with its draft review of the new ElWG (Electricity Industry Act) – although the final decision is still pending. The new fees for feed-in points without technology differentiation caused particular excitement. This means that both the huge gas-fired power plant and the small balcony PV system are affected by grid fees. In any case, the exemption from fees for storage facilities that serve the system is helpful. In addition, a social tariff of 6 ct/kWh is intended to support households in need. We at Inercomp support this introduction, but criticize the decentralized processing across all suppliers and the cost allocation based on the previous year’s volume instead of the last three months, as is the case with the OeMAG allocation. For further information and assessments on the ElWG, please contact us, your independent energy service provider.
The fact is that most regulations in many EU member states are not geared toward the overall optimum, but focus on individual network user groups. At the same time, different regulations are hindering the creation of a common energy market, even though all countries are facing the same challenges.
In contrast to the simmering punitive tariffs, July was a quiet month on the energy markets. The agreement on a transatlantic 15% tariff rate had no noticeable impact. In return, according to Trump, energy imports from the US are set to rise to USD 750 billion in three years – a figure that is hardly realistic: in 2024, according to Eurostat, the EU imported energy worth €376 billion, €75 billion of which came from the US. Even if gas supplies were completely covered by US LNG (€100 billion/year), an additional USD 150 billion per year would be needed from US oil. This would require the oil price to rise from USD 70 to over USD 100 per barrel – hardly feasible in terms of volume alone.
July was also quiet in geopolitical terms – conflicts in the Middle East paused, and the weather and summer lull dominated. After a hot June, rain and cooler temperatures brought relief. Energy prices showed less volatility: the German electricity front year (EEX) moved from 86.30 to 88.67 EUR/MWh, and the THE gas front year from 34.72 to 36.10 EUR/MWh.
The electricity spot market was stable: weekly prices ranged between 83 and 88 EUR/MWh, with the monthly average in Austria at 87.91 EUR/MWh – higher than in previous months, but significantly below the winter peaks of up to 140 EUR/MWh. This was due to weak wind generation (only 72–91% of normal) and slightly below-average PV production. There was a shortfall of 0.6 TWh, which was replaced by fossil fuels. Renewables stabilized at the end of the month. The cooling water situation remained uncritical, and French nuclear power plants ran steadily. Low momentum, stable demand, and good LNG supply characterized the futures market. The exception was Asia, where heat—for example, in Seoul, which experienced its highest temperature in seven years—caused storage levels to fall, attracted LNG ships, and caused slight price movements in Europe.
However, the summer break is not over yet. Calm fundamentals are preventing major price jumps. Futures market prices moved sideways in July – and have now done so for six weeks. The end of the heatwave, cooler temperatures in Asia and weak Chinese LNG demand are reducing the risk of Asia becoming a price driver. Europe remains attractive for US LNG. Nevertheless, there is little downside potential for gas. Storage targets remain market-determining. Although the EU is sticking to its 90% target, national adjustments mean that only 80% is actually necessary – a shortfall of around 12% currently. Europe must keep prices high enough to secure sufficient LNG in competition with Asia.
On the spot market, renewable energy production (115% of the norm in calendar week 31) is pushing prices toward EUR 70/MWh in the short term. However, forecasts of 2–3°C above normal for Germany, Austria, France, and Switzerland could once again lead to cooling water shortages—French nuclear power plants remain a source of uncertainty. The geopolitical risk is also increasing: the US is threatening sanctions against countries that buy Russian energy. Secondary tariffs could affect global LNG availability. At the same time, it remains unclear how the markets will assess the latest US-EU tariff agreement.
It is questionable whether the calm will continue – there are too many silent risks lurking beneath the surface. The coming weeks should show whether the summer lull will soon give way to renewed activity.
It is a strange summer. On the one hand, there is a high temperature gradient across the European continent – after midsummer weather, spring-like instability has set in with a mix of wind, rain, and sun in Central Europe. Meanwhile, other regions are affected by extreme heat. On the other hand, there is hardly any sign of the summer slump, especially not politically. Nothing less than the future of the energy industry is at stake. Infrastructure must be built, laws rewritten, networks established, their costs administered, and their future viability preserved with visionary foresight.
The political debate surrounding grid costs is becoming increasingly heated in many European countries. Quote from the German Association of Industrial Energy and Power Industry: “The future grid fee system should remove barriers to flexibility. (…). In general, the reform project should focus on reducing grid costs by providing incentives for behavior that benefits the system (…); simply redistributing costs between different grid user groups is not enough.” In many countries, we are seeing plans to change the existing regulations for grid control, which will have an impact on grid costs. However, this is happening in a rather sequential manner and often not holistically with regard to the effects on all grid players, which in turn results in higher administrative costs and higher grid costs for all consumption units. Dealing with PV surpluses is one of the most critical issues for this future grid infrastructure. European examples of political adjustments to this grid system:
Let’s start with Bulgaria: Combined accounting groups will be abolished there as of July 1. The effects on rolled-over balancing energy costs are being discussed in different ways and must first be observed.
In Romania, a regulation was passed on July 8 that exempts batteries from grid costs and GOOs (guarantees of origin) for electricity procurement. PV systems with a capacity of more than 10.8 kW to 400 kW must be equipped with storage systems.
In Croatia, a law on renewable energies and CHP came into force in April, changing the way surplus electricity is billed. At the same time, a law on the establishment of energy communities is to be passed in the summer of 2025.
Slovenia already implemented a major reform last year. Things are also getting complicated there: the Agencija za energijo (Slovenia’s energy regulator) is introducing a main and a secondary season, each with different grid prices. In addition, the day will be divided into five time blocks and a new performance-based tariff component will be introduced. In addition, an annual capacity is agreed for each delivery point, which is intended to ensure a cost-based distribution of grid costs.
Germany is facing a difficult period of change, partly because grid fees have been avoided for some consumer groups up to now. Many of the proposals on the table do not meet the aforementioned requirement for simple fee structures and the removal of barriers to flexibility.
Last but not least, Austria has also attracted a lot of media attention with its draft review of the new ElWG (Electricity Industry Act) – although the final decision is still pending. The new fees for feed-in points without technology differentiation caused particular excitement. This means that both the huge gas-fired power plant and the small balcony PV system are affected by grid fees. In any case, the exemption from fees for storage facilities that serve the system is helpful. In addition, a social tariff of 6 ct/kWh is intended to support households in need. We at Inercomp support this introduction, but criticize the decentralized processing across all suppliers and the cost allocation based on the previous year’s volume instead of the last three months, as is the case with the OeMAG allocation. For further information and assessments on the ElWG, please contact us, your independent energy service provider.
The fact is that most regulations in many EU member states are not geared toward the overall optimum, but focus on individual network user groups. At the same time, different regulations are hindering the creation of a common energy market, even though all countries are facing the same challenges.
In contrast to the simmering punitive tariffs, July was a quiet month on the energy markets. The agreement on a transatlantic 15% tariff rate had no noticeable impact. In return, according to Trump, energy imports from the US are set to rise to USD 750 billion in three years – a figure that is hardly realistic: in 2024, according to Eurostat, the EU imported energy worth €376 billion, €75 billion of which came from the US. Even if gas supplies were completely covered by US LNG (€100 billion/year), an additional USD 150 billion per year would be needed from US oil. This would require the oil price to rise from USD 70 to over USD 100 per barrel – hardly feasible in terms of volume alone.
July was also quiet in geopolitical terms – conflicts in the Middle East paused, and the weather and summer lull dominated. After a hot June, rain and cooler temperatures brought relief. Energy prices showed less volatility: the German electricity front year (EEX) moved from 86.30 to 88.67 EUR/MWh, and the THE gas front year from 34.72 to 36.10 EUR/MWh.
The electricity spot market was stable: weekly prices ranged between 83 and 88 EUR/MWh, with the monthly average in Austria at 87.91 EUR/MWh – higher than in previous months, but significantly below the winter peaks of up to 140 EUR/MWh. This was due to weak wind generation (only 72–91% of normal) and slightly below-average PV production. There was a shortfall of 0.6 TWh, which was replaced by fossil fuels. Renewables stabilized at the end of the month. The cooling water situation remained uncritical, and French nuclear power plants ran steadily. Low momentum, stable demand, and good LNG supply characterized the futures market. The exception was Asia, where heat—for example, in Seoul, which experienced its highest temperature in seven years—caused storage levels to fall, attracted LNG ships, and caused slight price movements in Europe.
However, the summer break is not over yet. Calm fundamentals are preventing major price jumps. Futures market prices moved sideways in July – and have now done so for six weeks. The end of the heatwave, cooler temperatures in Asia and weak Chinese LNG demand are reducing the risk of Asia becoming a price driver. Europe remains attractive for US LNG. Nevertheless, there is little downside potential for gas. Storage targets remain market-determining. Although the EU is sticking to its 90% target, national adjustments mean that only 80% is actually necessary – a shortfall of around 12% currently. Europe must keep prices high enough to secure sufficient LNG in competition with Asia.
On the spot market, renewable energy production (115% of the norm in calendar week 31) is pushing prices toward EUR 70/MWh in the short term. However, forecasts of 2–3°C above normal for Germany, Austria, France, and Switzerland could once again lead to cooling water shortages—French nuclear power plants remain a source of uncertainty. The geopolitical risk is also increasing: the US is threatening sanctions against countries that buy Russian energy. Secondary tariffs could affect global LNG availability. At the same time, it remains unclear how the markets will assess the latest US-EU tariff agreement.
It is questionable whether the calm will continue – there are too many silent risks lurking beneath the surface. The coming weeks should show whether the summer lull will soon give way to renewed activity.
Good luck with your energy decisions!
Yours,
Felix Diwok
For the Inercomp team