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German gas plants priced out of merit

3 min read

16:41UTC

German day-ahead cleared €103.16/MWh on Monday against a CCGT marginal cost of €118 to €124, inverting the clean spark spread and pushing the fleet off-merit into the worst July injection pace in six years.

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Key takeaway

German CCGTs now lose up to €21 per MWh, freeing gas for caverns filling 17% slower.

German day-ahead power cleared an average of €103.16/MWh on Monday 20 July, inside a range running from €0.00 to €194.77⁠¹. Solar and wind oversupply held the 03:00 to 06:00 block at zero for four hours; the evening peak carried the top of the range.

Put the three verified inputs together. Monday's TTF settlement, burned through a modern combined-cycle gas turbine at 55 to 58% efficiency, costs €102 to €108 per MWh of electricity. EUA carbon at €80.00⁠², at roughly 0.2 tonnes per MWh, adds another €16. Marginal cost therefore lands between €118 and €124 against €103.16 of revenue, putting the clean spark spread between minus €15 and minus €21. Four sessions earlier it was positive, on German day-ahead at €156 and carbon at €80.14.

Only part of that swing belongs to Hormuz, and the decomposition deserves stating rather than glossing. The fuel leg carries the conflict premium and nothing else: gas has risen since 15 July, worth €7 to €8 of extra generation cost, while carbon has not moved at all. The power leg did the rest, falling more than €50 from Thursday's print, and a Monday in late July carrying four hours of zero-priced solar has an ordinary seasonal component behind it that no conflict explains. Call the split roughly 13% conflict, 87% weather and calendar. Anyone selling this as a pure Hormuz effect is selling about €8 of it and hoping nobody checks the other €50.

Either way the fleet stays off-merit, and the storage consequence does not change. Gas that would have gone into German turbines now has somewhere else to go, and the caverns need it: net EU injections since 1 July are running 17% below last year, the slowest July fill pace in six years against the 5 July baseline⁠³. The bloc still reached 52.49% on 15 July on data from GIE, the Gas Infrastructure Europe body that runs the AGSI+ transparency platform⁠⁴, so the level keeps climbing while the pace falls behind. Whether a spread this negative converts into a faster injection rate over the coming week is the practical test of whether demand destruction buys anything for the November floor.

Deep Analysis

In plain English

A "clean spark spread" is the profit a gas-fired power plant makes from selling electricity after paying for its gas and its carbon permits. When that number goes negative, as it did in Germany on 20 July, running the plant loses money. Two things happened at once: a burst of solar power pushed midday electricity prices to zero for four hours, and gas costs stayed high because of the Hormuz standoff in the Gulf. Plant operators are stuck between cheap power they cannot profit from and expensive fuel they still have to buy, which is why the country's gas fleet went "off-merit", meaning it is too costly to run right now.

Deep Analysis

Root Causes

A four-hour window of zero-priced solar generation removes the hours in which CCGT plants can recover their marginal cost, and German gas units face real start-up costs that make cycling off and back on within a single day expensive, so operators are stuck holding capacity that clears below cost rather than shutting down for a few hours.

The fuel side compounds the squeeze but is not the main driver: marginal cost of €118 to €124/MWh sits well above the €103.16 day-ahead print, and only roughly €7 to €8/MWh of that gap traces to the Hormuz-linked gas premium. The remainder, more than €50/MWh, is the power leg falling from Thursday's heat print into a Monday session with weak demand and heavy solar output.

What could happen next?

Consequence
CCGT operators facing repeated negative spark spreads have a stronger incentive to bid into StromVKG's capacity auctions for guaranteed standby revenue rather than rely on wholesale margins alone.
Risk
If the fuel-cost leg reverses once Hormuz risk eases while the solar-driven power leg persists through summer, the spread could stay negative even after gas prices fall, exposing operators who assumed today's loss was fuel-driven and temporary.

Source Landscape

This story draws on neutral-leaning sources

Primary parallel: German day-ahead power itself flipped the clean spark spread from roughly negative on 14 July to positive by 16 July as cooling demand rose under the same heat dome. The fleet has already shown it can swing from off-merit to on-merit and back inside a single week.

Counter-parallel: Over 6 to 10 July, German and French baseload rose together rather than diverging, squeezing Germany's spread without inverting it. Heat and solar do not always push CCGT fully off-merit; sometimes they only narrow the margin, which argues against reading every hot spell as a guaranteed inversion.

Consensus view: The Oxford Institute for Energy Studies has tracked German CCGT running margins collapsing repeatedly this window as renewables build-out compresses the hours in which gas plants can clear the market, framing today's inversion as the fleet's structural exposure showing through rather than a one-off.

Counter-view: The IEA's July Oil Market Report flags that the same Hormuz-linked escalation clouding its 2027 supply outlook is also the reason gas-fired fuel costs are elevated at all; on that reading the spread's fuel leg, not its power leg, is the part genuinely exposed to reversal if the strait standoff eases.

Key tension: Whether the dominant driver is Germany's own thin flexibility to shut CCGT capacity around a midday solar glut, a structural condition, or the volatile fuel-cost input from the Gulf, which could unwind the inversion within days rather than months.

Sources:SMARD / Bundesnetzagentur via energy-charts.info·ICE via Investing.com

Mentions:TTF →EUA →CCGT →IEA Oil Market Report →Germany →GIE AGSI+ →Oxford Institute for Energy Studies →

First Reported In

Update #28 · Hormuz premium inverts the German spark spread

SMARD / Bundesnetzagentur via energy-charts.info· 20 Jul 2026

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Causes and effects

Caused by

German power climbs to €156, spark flips

The positive clean spark spread recorded on 16 July inverted to negative by 20 July as gas and carbon costs outpaced power revenue.

Occurred 16 Jul 2026

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EUA carbon slips back below €81

EUA's EUR 80.14 close on 16 July fed into the same EUR 16 carbon floor that holds marginal cost above power revenue on 20 July.

Occurred 16 Jul 2026

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This Event

German gas plants priced out of merit

A negative clean spark spread removes gas-fired demand at the exact point in the calendar when Europe needs every molecule going into storage.

Led to

German caverns quit the prompt-gas bid

The 20 July negative spark made cavern injection uneconomic, stalling German storage buying.

Occurred 21 Jul 2026

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German spark spread hits cycle worst

The 20 July spark-spread inversion (ID:5152) deepened into the cycle's worst print as wind, not the earlier gas/carbon premium, took over as the driver.

Occurred 26 Jul 2026

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German gas plants back in profit

The clean spark spread flipped positive, reversing the negative spread recorded on 20 July when gas and carbon costs outpaced power.

Occurred 30 Jul 2026

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Different Perspectives

Council on Foreign Relations

CFR's analysis identified 18.75% of the 48-team field facing access barriers — the only available quantification after the State Department admitted it has none. The explicit contrast with South Africa 2010's visa waiver for all ticket holders positions the US as a regressive host by historical standards.

New York commuters / Assemblyman Bhalla

Bhalla framed Penn Station's closures as a class issue: 'For the 99 percent that can't afford to attend the games, it would be nice to at least know how you're going to get home from work.' Eight closures lock 650,000 daily commuters out for tournament traffic, with one on a Monday rush hour.

French Football Federation

The FFF called an 11:00 CEST press conference for 28 July, at its Paris headquarters, following an extraordinary executive committee meeting, at which Zinedine Zidane is expected to be presented as head coach succeeding Didier Deschamps. As of this writing no communique confirms the appointment, contract length or start date.

Morocco

Morocco is pushing for the 2030 final at its Grand Stade Hassan II in Casablanca, a planned 115,000-seat venue that would be the world's largest football stadium on completion. The venue is contested by a Spanish petition for the Santiago Bernabeu, and FIFA has fixed neither the venue nor the tournament's proposed 64-team format.

FIFA

FIFA's first tournament report, published 27 July, itemises nearly 300,000 accredited personnel, 73,700 security staff and 300,000 square metres of custom-grown turf, with no revenue or cost figure attached. As a Swiss association answering to its own Congress rather than a treasury, FIFA has followed the same operational-before-financial sequence it used after Qatar 2022.

Javier Tebas / La Liga

La Liga president Javier Tebas said on 21 July that FIFA's system is rotten from the root and that Gianni Infantino's time as president has, in his words, concluded. Tebas has no vote in FIFA's process, so days after the IOC declined jurisdiction over a separate ethics complaint, he used the only instrument he has.

Written with AI from Lowdown's published reporting. Not individually reviewed by an editor. Editorial standards.