Gas prices keep climbing, experts warn of pricier winter electricity
Natural gas prices have hit their highest level since late 2022, threatening significantly costlier winter electricity than last year. Experts say further price increases cannot be ruled out.
Natural gas prices have risen sharply, reaching levels last seen at the end of 2022. This means that even at current prices, electricity generated by gas-fired plants could be notably more expensive this winter than a year ago.
Amid escalating conflict in the Middle East and difficulties shipping gas through the Strait of Hormuz, the benchmark TTF gas price rose above 70 euros per megawatt-hour on Monday. Over just the past three months, natural gas prices have nearly doubled.
Forecasts may not match reality
According to Elenger board chairman Margus Kaasik, current forecasts remain more optimistic than the actual market situation. While long-term projections point to improvement, prices have been creeping upward week by week, meaning today's forecasts may not reflect the real cost of gas this winter. If the situation in the Strait of Hormuz remains unresolved, the likelihood of further price increases stays high.
Effect on electricity prices
Rising gas prices are already being felt in electricity costs. Ignitis Eesti CEO Timo Tatar explains that gas becomes especially important during hours when wind and hydro power are insufficient — typically the morning and evening peak hours. At those times gas-fired plants must be brought online, sometimes pushing evening electricity prices to 150 euros per megawatt-hour or higher, which in turn raises the average daily price.
Experts note that this winter's prices will largely depend on weather conditions. A cold, low-wind winter would require more frequent use of gas plants. Low gas storage levels in European reservoirs and rising consumption could also push prices up.
Enefit board member Tiit Hõbeiegi says the risks for the coming winter are notably higher: besides costlier gas, Norway's water reserves are at their lowest in 30 years, reducing the usual availability of cheap hydropower in winter, while CO₂ quota prices have also risen.
According to Eesti Energia's estimate, gas-fired plants could generate electricity roughly 25% of the time this winter, with prices during those hours potentially reaching 175 euros per megawatt-hour.
