Europe's Power Prices Surge as Dunkelflaute Cuts Wind and Solar Output

Europe is entering its first extended spell of cool, cloudy and nearly windless weather of the heating season, sharply reducing wind and solar output just as demand for heating rises. The resulting “Dunkelflaute” is expected to weigh especially heavily on Germany and the UK. German wind generation is forecast to average below 7 gigawatts through next week, less than half its year-to-date average, while cloud and fog will also limit solar production. Forecasters expect high pressure to keep winds weak through at least Sunday, with the possibility of a longer lull, though the outlook remains uncertain.

The renewable shortfall is pushing power markets toward costly backup generation, particularly natural gas, whose price has climbed amid Middle East supply disruptions and recently topped €100 per megawatt-hour for the first time since the 2022 energy crisis. German day-ahead electricity exceeded €300 per megawatt-hour for Thursday, roughly twice October’s average, and evening hourly prices topped €500. Similar surges have appeared in markets across Europe, with prices reaching their highest levels since December 2022. The rapid reversal - from €13 per megawatt-hour in Germany on Sunday to more than €300 days later - shows how volatile prices can be. The episode offers an early indication of winter’s potential costs, while the effect on household bills will depend on temperatures and how often prolonged renewable-output slumps occur.