German gas plants priced out of merit

German day-ahead power cleared an average of EUR 103.16/MWh on Monday 20 July, inside a range running from EUR 0.00 to EUR 194.77 ¹. 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 EUR 102 to EUR 108 per MWh of electricity. EUA carbon at EUR 80.00 ², at roughly 0.2 tonnes per MWh, adds another EUR 16. Marginal cost therefore lands between EUR 118 and EUR 124 against EUR 103.16 of revenue, putting the clean spark spread between minus EUR 15 and minus EUR 21. Four sessions earlier it was positive, on German day-ahead at EUR 156 and carbon at EUR 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 EUR 7 to EUR 8 of extra generation cost, while carbon has not moved at all. The power leg did the rest, falling more than EUR 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 EUR 8 of it and hoping nobody checks the other EUR 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 baseline ³. The bloc still reached 52.49% on 15 July on data from GIE, the Gas Infrastructure Europe body that runs the AGSI+ transparency platform ⁴, 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.