After an incredible historic high of 240 €/MWh in August 2022, gas prices had continued to fall during the year 2023. In February 2024, the price of the TTF (European wholesale price negotiated in Rotterdam) had fallen back to 30 €. Historically, however, this value remained high compared to the prices (around €15) which dominated before the energy crisis and the Russian-Ukrainian conflict. Unfortunately, since mid-2024, prices have started to rise again. At the start of the week, the TTF was flirting with €50, an increase of 45% since February 2024.
Jackpot for America
Multifactorial, this increase is mainly exogenous. As we approach the winter period, European stocks, although satisfactory, are lower than in previous years. But it is above all geopolitical tensions with Russia which are causing this increase. Remember that of the three European systems, the only one still in service is the Brotherhood (or “fraternity” pipe) transporting Russian gas through Ukraine. The other two (Nord Stream, sabotaged by explosion on September 26, 2022, and Yamal, crossing Belarus) are no longer operational. However, with the contract between Russia and Ukraine on the Brotherhood coming to an end at the end of the year, there is considerable uncertainty regarding its renewal. Making markets nervous, these uncertainties automatically cause prices to rise. If the transit contract is not renewed, Europe would have no choice but to once again increase its imports of liquefied natural gas (LNG) from the United States. For comparison, the MWh of gas is sold on the American spot market for €12, or… four times cheaper than in Europe! Increasing imports of American LNG should continue to increase gas prices in Europe.
For Donald Trump, it's the jackpot. Especially since in gratitude for our massive purchases of LNG at high prices, the newly elected president plans to heavily tax our imported products. More naive than ever, Europe, which has always refused to develop its shale gas, will lose on all counts.
The increase in gas prices is not the only bad news. While the major cold periods have not yet set in, we have seen the spot electric MWh exceed €150 on the wholesale market. This is not surprising since gas, as a marginal source, imposes the price of electricity and it takes between 2 and 3 MWh of gas to produce one MWh of electricity.
Suicide planned on the altar of virtue
Very bad news for a government which is struggling to pass a budget and is stumbling in particular over the desire of the RN and the NFP to restore purchasing power to the French by significantly lowering the price of their electricity bill.
Before the crisis, the TICFE (domestic tax on final electricity consumption) was €32/MWh. To compensate for the dizzying increases in the price of MWh during the 2022 crisis, the State temporarily abolished the TICPE. It has since been increased to €22. Following the definitive end of the tariff shield in February 2025, it was to return to its original value of €32 from February 2025. At the last reading and under pressure from the RN, the government agreed to maintain it at €22 .
Thanks to this decision, the 60% of French people benefiting from the “blue tariff” were to see their bill drop by 16% at the start of 2025. However, this reduction could quickly become obsolete. The increase in wholesale electricity prices following the increase in gas prices should quickly reverse the expected decline. Unless a tariff shield is put back in place for which the State no longer has the means, the French could see their bill increase, not fall, in 2025. The demands of the RN and the NFP therefore run counter to the reality of markets.
But the tragedy could above all come from the 40% of households and businesses whose contracts indexed to market prices bear the brunt of increases in wholesale prices. This is particularly the case for many SMEs, already in great difficulty (failures have never been so numerous and mass social plans are being announced, with nearly 200,000 jobs at risk): will they be able to absorb energy costs? additional to the extent that a new “whatever the energy cost” no longer seems possible?
The only way to regain margins of competitiveness would be to take a temporary pause on the European energy transition which is at the same time unrealistic, unfair, unsustainable and above all useless in terms of climate. Remember that currently, France spends nearly 100 billion euros annually (including 30 billion in public funds) in the energy transition. Without this pause, Europe will continue its planned suicide on the altar of virtue!
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