Germany Faces Tight Power Supply as Wind Output Plunges, Prices Set to Rise

Germany is facing its tightest power supply margins of the winter so far, driven by a combination of low wind output and unexpectedly high energy demand due to colder weather, according to Bloomberg models.

The country’s power margin – the difference between available capacity and expected demand – is projected to reach its winter low on Wednesday.

Wind power generation is forecast to plummet below 3 gigawatts, a significant shortfall. Simultaneously, electricity demand is exceeding seasonal averages due to colder temperatures across the country. This situation is forcing Germany to rely more heavily on fossil fuel-based power generation and electricity imports from France.

This latest squeeze on Germany’s power supply comes after several windless periods this winter, which have already led to record-breaking depletion of gas reserves. These events have heightened concerns about the country’s energy security, especially if prolonged periods of low wind output continue.

While temperatures in Northwest Europe are expected to remain slightly below seasonal norms this week, adding to heating demand, a brief reprieve in energy prices was seen recently. German year-ahead power prices fell to their lowest point since mid-November as milder, windier weather eased concerns about rapidly dwindling gas reserves.

However, this respite is expected to be short-lived. Day-ahead power prices have already climbed to €140.50 per megawatt-hour, according to broker data, reflecting the imminent tightening of supply. While forecasts predict a return to windier conditions next week, the immediate outlook remains precarious for Germany’s energy grid.