The combination of Covid-19 confinement measures and unusually good weather triggered a highly volatile first quarter of 2020 for Europe’s energy markets, according to the Commission’s quarterly reports on gas and electricity markets published recently.

It was a particularly turbulent three months for both supply and demand, the net impact of which was a record high (40%) for the quarterly share of renewables in electricity generation, and a record low (33%) for the share of fossil fuels. In addition to this, sales of electric vehicles doubled relative to the same period in 2019.

According to an EC press release, the widespread Covid-related  lockdown measures imposed around the EU in March – in combination with a relatively warm and windy winter – led to a 3% reduction in electricity consumption in the EU27 in Q1 2020 (year-on-year) and a sharp drop in demand for gas in the industrial sector. And the trend is likely to be even more marked in the second quarter.

The electricity market report highlights a dramatic change in the structure of the EU27 power mix – with on the one hand a 30% drop in coal generation (-38TWh) relative to the   first quarter of 2019 and a -3TWh fall in gas, and on the other hand a surge in renewables production achieving a 40% share in the power mix, the highest quarterly figure to date. Overall, the share of electricity generated by burning coal, gas and oil declined from 38% in Q1 2019 to 33% in Q1 2020. This is the lowest quarterly figure on record.

The gas report also illustrates a volatile quarter. Energy prices, including natural gas, underwent a steep fall, and the EU gas import bill fell below €10 billion, which was the lowest quarterly total in the last six years.

Retail gas prices for industrial customers with median annual consumption were down by 10%, and for big consumers price decreases were even more marked (17%-20%) in Q1 2020 year-on-year.

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