20JUL

German power climbs to EUR 156, spark flips

2 min read

11:19UTC

German day-ahead power cleared EUR 156/MWh on 16 July, up from EUR 126 two days earlier, as cooling demand under the heat dome dragged the clean spark spread from negative into positive.

← Back to Hormuz premium inverts the German spark spread Jump to analysis ↓

EconomicDeveloping

Key takeaway

A demand-driven spark spread turned Germany's CCGTs profitable, a margin a cooler week would knock out.

Germany day-ahead power cleared an average EUR 126/MWh on 14 July, EUR 132 on 15 July and EUR 156 on 16 July, climbing on cooling demand as the heat dome held ¹. Day-ahead is the price for next-day delivery; the clean spark spread is what a gas-fired CCGT earns after paying for its gas and its carbon. Run these clears through the standard 49.13% efficiency and 0.365 tCO2/MWh convention, against TTF near EUR 55 and EUA carbon near EUR 80, and the spread swings from roughly negative on 14 July to positive by 16 July.

German combined-cycle plants clear because the heat needs the megawatts, and the margin turning positive is a by-product of power outrunning its inputs rather than any softening in gas. That distinction is the whole trade: a spark spread that widens on power strength behaves differently from one that widens on cheap fuel, because it collapses the moment the heat breaks.

This eases rather than reverses the squeeze the desk logged on 9 July, when gas and power rose together and compressed the same spread . Then the pressure came from the fuel side; now it comes from demand. The CCGT stack is back in the money, but on a footing that a cooler week would knock straight out again.

Deep Analysis

In plain English

Gas-fired power stations in Germany make money on the gap between what they pay for gas and carbon permits and what they earn selling electricity. That gap, called the clean spark spread, had been slim or negative for weeks. This week electricity prices jumped because of the heat wave (people running air conditioning), while gas and carbon costs did not rise as much, so gas power plants suddenly became profitable to run again. It is less about gas getting cheaper and more about electricity getting more expensive faster than its ingredients did.

Deep Analysis

Root Causes

Germany's clean spark spread flips sign whenever day-ahead power climbs faster than its two input costs, gas (TTF) and carbon (EUA), move together. This window that happened because cooling demand pulled German day-ahead from EUR 126 to EUR 156/MWh across three sessions while TTF firmed only modestly and EUA actually eased back under EUR 81 (see the carbon event in this briefing), leaving the power side of the equation to do almost all the work.

The structural precondition is thin renewable output: when wind generation is low during a heat dome, as it has been through this window, German CCGT plant sets the marginal clearing price directly, so any demand spike shows up in the power price with little dilution from cheaper generation displacing it.

What could happen next?

Consequence
A positive clean spark spread gives German CCGT operators an incentive to run harder into the remaining heat window, which in turn supports gas demand even as storage injection slows elsewhere.

Sources:Trading Economics·energyprices.eu (ENTSO-E sourced)

Mentions:Germany →EUA →CCGT →TTF →

First Reported In

Update #27 · TTF hits EUR 55; the arb won't confirm it

Trading Economics· 16 Jul 2026

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Causes and effects

Caused by

Two shocks squeeze the spark, not FR-DE

Continues the 9 July gas-and-power squeeze on Germany's clean spark spread, which now turns positive rather than negative.

Occurred 9 Jul 2026

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This Event

German power climbs to EUR 156, spark flips

The spark margin turned positive because power outran its own fuel and carbon costs, not because gas got cheaper.

Led to

German gas plants priced out of merit

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

Occurred 19 Jul 2026

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Different Perspectives

Marine insurers and AIS trackers covering Hormuz

AIS data shows severe curtailment on 20 July, 479 vessels anchored, 36 dark, 123 still broadcasting inside the strait, not the closure the IRGC claims. War-risk premiums move on the unresolved CENTCOM-IRGC contest itself, since underwriters price the dispute as much as the count.

QatarEnergy

Ras Laffan has run at minimum output under force majeure into August since 9 July, a constraint already priced before this week's claim. The 17-20 July move is risk premium stacked on that standing loss, not a new physical loss at the plant.

ACER and the European Commission

ACER opened the REMIT reporting consultation on schedule on 16 July, giving firms to 11 September before a quarter to build systems against Regulation 648/2012. Brussels' separate silence on StromVKG state-aid clearance leaves Berlin's own capacity mechanism without legal authorisation.

EDF and French grid operator RTE

France's discount to Germany rests on an ASNR derogation from the 28C river-cooling limit at Bugey that expires today, not on a nuclear recovery; Chooz, Golfech and Bugey restarts run to 25 July. The cheap leg holds only as long as regulators keep waiving the limit each heatwave.

German CCGT operators and grid balancers

German gas plants went off-merit on 20 July as the clean spark spread inverted to minus EUR 15 to minus EUR 21/MWh, sidelining the flexible capacity storage injection needs. Operators are pricing 2027-28 capacity revenue against Bundesnetzagentur's own admission that Brussels has not cleared the 9 GW StromVKG auctions.

LNG spreads desk

The JKM-TTF arb flipped to a TTF premium of roughly USD 0.6/MMBtu on 15 July, the first time this cycle Europe has outbid Asia, yet no Atlantic cargo has rerouted west. Until a cargo actually moves, the desk reads the Hormuz premium as unconfirmed and the EUR 55 print as vulnerable to a fast reversal.