Germany's weak winds stoke Europe-wide power market worries: Maguire
LITTLETON, Colorado, Jan 29 (Reuters) - Wind power generation in Germany - Europe's largest wind producer - is on track to record its longest stretch of below-normal production since early 2021 due to a spell of low wind speeds since October.
Wind power is Germany's primary source of electricity, and wind output historically peaks over the winter months when wind speeds at turbine level tend to hit their highest for the year.
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However, the current four-month long period of sub-par output has forced German power firms to sustain high levels of output from fossil fuel power plants to balance system needs, and to boost power imports from neighbouring nations.
In turn, higher German power imports have contributed to a rise in regional power prices across Europe, which have started 2025 at their highest in nearly two years and roughly 70% above their average from 2020 through 2021, according to LSEG.
If Germany's wind farms continue to generate at below capacity, German power firms may be forced to further increase fossil-fired power output and imports, and trigger a further tightening in Europe's power markets as 2025 unfolds.
WIND WOES
German wind electricity output contracted by 3% in 2024 from 2023's levels to around 131 terawatt hours (TWh), according to data from Ember.
That was only the second year-over-year contraction in wind production since 2015, and came despite an increase in German installed wind generation capacity in 2024.
The shortfall in wind production versus 2023 came mainly during the final quarter of 2024, when cumulative wind electricity output dropped by 22% from the same months of 2023 due to sharply below-normal wind speeds across wind farm areas.
Those lackluster output levels have extended into 2025, with wind power generation over the first 28 days of January amounting to around 590,000 megawatt hours, according to LSEG, and 16% less than the same dates in 2024.
To compensate for that dip in wind output, German power producers have increased output from fossil fuel-fired plants.
Cumulative production from lignite, hard coal and natural gas plants was around 587,000 megawatt hours over the first 28 days of 2025, which is up 4.5% from the same period in 2024.
In addition, Germany power firms have increased overall power imports and reduced power exports so far in 2025 from January 2024, according to industry portal energy-charts.info.
PRICE IMPACT
Reduced natural gas supplies from Russia since late 2024, as well as increased jitters among power suppliers about potential gas scarcity in 2025, have helped stir up bullish power price sentiment across Europe so far this year.
So far in January 2025, German spot wholesale base power prices have averaged around 113 euros per megawatt hour (MWh), which is up 47% from January 2024, according to LSEG.
Because of the scale of Germany's power needs - the largest in Europe - other regional power prices have trended higher in tow, with the average price across 21 countries tracked by LSEG also holding around 113 Euros/MWh.
Power prices in Italy and The Netherlands have also climbed by over 40% from a year ago, while power prices in France - the region's largest net power exporter - are up by 33%.
FORWARD GUIDANCE
Wind power generation in Germany has peaked during the first quarter in four of the past six years, and has otherwise peaked during the final quarter of the year, Ember data shows.
In all years, wind generation tends to contract to annual lows during spring and summer, when wind speeds are lowest.
For German power suppliers, that means Germany's wind farms still have the potential to lift output from current levels this winter, and could allow for a rise in overall power output as well as potential cuts to fossil fuel use.
However, the latest wind generation forecasts through mid-February continue to call for below-normal wind output levels, according to LSEG.
That suggests that Germany's overall clean power output may remain constrained this year despite steady additions to renewable generation capacity.
If that's the case, then additional use of fossil fuels in power generation can be expected, which will raise power emissions, as well as further power imports that will continue to tighten regional power balances and prop up prices.
(Reporting By Gavin Maguire; Editing by Sonali Paul)