Heatwave pushes Europe back into energy crisis with soaring prices

Europe's energy system is buckling under a severe heatwave, leading to volatile and record-high electricity prices. On Wednesday, day-ahead electricity prices in Germany were expected to hit 868.22 euros per megawatt-hour in the evening, while France anticipated a peak of 414.36 euros during the same period. These figures represent a significant increase over normal market levels.

The soaring prices are not indicative of a power shortage but rather a tightening of system reserves. This scarcity necessitates the use of increasingly expensive power generation units to meet demand. Consequently, France and Germany have ramped up their reliance on fossil fuel-powered plants.

French gas-fired power plants, for instance, have raised their output to levels not seen since April, operating at nearly 5 gigawatts. This surge in fossil fuel use highlights the system's struggle to cope with the increased demand driven by the heatwave, pushing energy costs to unprecedented heights.