(Bloomberg) -- The cost of procuring electricity to power and heat Europe this winter is reaching extraordinary levels as uncertainty over energy supply grips the market.

Germany is facing risks to obtain enough natural gas to fuel power stations during the heating season, with France’s nuclear reactors hobbled by delayed maintenance and outages. Those factors are raising costs for households and businesses across the continent, adding to inflation concerns. 

“The risk of seeing a further decline in Russian gas pipeline exports to Europe is making the market very nervous,” said Carlos Torres Diaz, an analyst at Rystad Energy AS. “It seems like the market is starting to price in a more pessimistic scenario for the winter.”

Uniper SE entered into discussions with the German government on a possible bailout after Russia curbed natural gas deliveries, forcing the company to buy fuel in the spot market at higher prices. Citigroup Inc. warned that the country must allow utilities to pass on elevated gas costs to consumers, or risk “very negative” consequences for the continent’s power and gas markets.

German Consumers Must Pay Higher Gas Prices or Risk Market Chaos

Germany is implementing an emergency plan to bring coal plants back online to power the country in winter, while across Europe discussions are ongoing to prepare in case heavy industry needs to be switched off this winter.

German power for next year, a benchmark for Europe, has risen 12% this week to trade at 287 euros per megawatt-hour. The contract on exchange EEX rose 2% in early trading on Thursday.

That’s approaching the major spikes seen in the market just before Christmas, when year-ahead prices rose as high as 335 euros on Dec. 22.

Extreme highs have also come to the French market, where traders have been wary of the low availability of Electricite de France SA’s nuclear capacity ahead of winter, when the company normally generates enough surplus power to export. 

Peakload prices for the cost of power at times of high demand in December have climbed by almost 50% over a 14-session rip to close at 1,513 euros per megawatt-hour on Wednesday. French year-ahead prices edged higher yesterday. 

©2022 Bloomberg L.P.