It only took a few cold weeks to break Europe free from its three-year-long energy glut.
From Houston to Oslo and Moscow, companies that sell natural gas have seen sales and exports surge at the start of the year as Europe scrambles to secure enough supplies to manage the harsh weather. After forecasts for a mild winter, January temperatures plunged enough to freeze rivers and cut off supplies for tens of thousands of homes.
The revenue boost offered a reprieve from a price collapse that’s lingered since 2014, with supply overwhelming demand during the three warmest years on record. While consumers and industry will be hit by higher bills after February power prices in Germany surged to a record and U.K. gas traded near a four-year high, energy companies are enjoying a winter windfall.
“We have had quite a few hard years in terms of mild winter and this is a big positive deviation,” said Elchin Mammadov, a London-based utilities analyst at Bloomberg Intelligence. “It will have an impact on first-quarter results.”
German utilities have run their available plants at full throttle as temperatures plunged to a countrywide average of minus 4 Celsius (25 Fahrenheit) some days last week. Energie Baden-Wuerttemberg AG, Uniper SE and other utilities were also asked to activate some reserve plants, resulting in payments of more than 19 million euros, according to a Bloomberg estimate based on output and a government document on compensation.
Utilities and German grid companies declined to comment or couldn’t comment on overall costs. Temperatures in the country are seen remaining below zero through the weekend, compared to a 10-year average of about 1 degree Celsius.
With more than two months of winter to go, and European stockpiles of gas at less than half full, further price surges are possible, according to Massimo Di’Odoardo, the London-based research director for European gas at industry consultant Wood Mackenzie Ltd.
“The weather this year has really surprised people,” he said in an interview in London.