The active monthly contract (delivery in July) for Dutch electricity (baseload) is currently trading at around EUR 78/MWh, while the annual contract for delivery in 2026 is slightly higher at EUR 85/MWh. After a decline in early April driven by developments in the relatively tight gas market, we are now seeing stabilisation. At the same time, the price of emission allowances within the EU ETS is currently fluctuating between EUR 70/tonne and EUR 75/tonne. The European Commission will decide shortly on a possible increase in supply to finance REPowerEU expenditure.
The fall of the cabinet has brought additional uncertainty about national energy and climate policy. The concrete consequences for the electricity market will develop in the coming months. What is clear is that the heat transition largely depends on (national) policy measures and market incentives. For example, it appears that the demand for heat pumps has increased, precisely because of the phasing out of available subsidies.
The ECB lowered its policy interest rate to 2% on Thursday 5 June. In the short term, US trade tariffs could push inflation down further and slow economic growth, which could prompt further interest rate cuts. However, the impact of the ECB's interest rate cuts on the costs of developers of renewable energy projects, such as offshore wind, is limited. These projects are often dependent on long-term loans, and long-term interest rate markets are largely dependent on the level of the risk premium. Here, interest rates have “normalised” since 2022, which means that the ECB interest rate is not translating into cheaper long-term loans.
