The futures prices of European natural gas experienced a significant surge on August 9th, marked by intraday trading prices that soared by 40%. By the trading closing on the same day, Dutch TTF natural gas futures for September delivery exhibited a noteworthy increase, settling at €39.8/MWh, reflecting a remarkable 28% uptick from the closing price observed on the preceding trading day.
The potential catalyst for these elevated gas prices can be traced back to impending strikes initiated by employees of prominent Australian gas suppliers. Notably, workers at the Australian facilities of global energy giants Chevron (CVX.US) and Woodside Energy Group Ltd. have cast their votes in favor of authorizing strike actions at vital energy plants such as North West Shelf, Wheatstone, and Gorgon. This significant development has the potential to culminate in labor strikes as early as the upcoming week, pursuant to relevant labor regulations. Of paramount concern is the fact that these impending strikes, if realized, possess the capacity to disrupt the operations of the three above principal liquefied natural gas supply facilities, subsequently impacting approximately 10% of the world’s natural gas exports.
The European natural gas sector finds itself still in the de-stocking phase, setting the stage for an anticipated surge in natural gas prices during the upcoming peak consumption season. Based on GIE data, as of August 4th, the natural gas reserves across 27 European nations have exceeded 86% of their maximum storage capacity. This represents a notable 7.91% increase compared to the previous month and a significant 33.56% surge compared to the corresponding period last year. At present, the inventory stands at a relatively robust level. However, with the conclusion of summer, Europe is poised to enter the subsequent peak season for natural gas consumption. Should simultaneous labor strikes occur, a potential tight supply situation could ensue, impacting European natural gas reserves and creating uncertainty for the winter supply, or that would serve to further elevate natural gas prices.
The prospect of heightened natural gas prices has the potential to catalyze interest in household PV and solar storage solutions across Europe. The prevailing low natural gas prices have influenced current user-side electricity rates, which remain significantly depressed, registering a decrease of over 80% when contrasted with the corresponding period in the previous year. This recent uptick in natural gas prices constitutes the most substantial growth observed this year. Furthermore, should the upward trajectory in natural gas prices persist, it is likely to impart a noteworthy boost to user-side electricity costs in Europe.
User-side power prices, in turn, stand as a pivotal driver for the demand surge in household PV and solar storage systems throughout Europe. The escalation in electricity costs has the potential to profoundly enhance the economic viability of household PV and solar storage setups, thereby stimulating a surge in installation demand. Consequently, the trajectory of natural gas prices is poised to invigorate the prevailing tepid demand for PV and solar storage solutions within the European context.