Frosts Expected in Europe and East Asia: A Test for Energy Markets

Europe and East Asia will face cold waves next week – an early test for energy markets already destabilized by rising prices and competition for liquefied gas supplies. Average temperatures in vast areas of continental Europe will drop 2–3°C below normal by the end of the week. In northeastern China, Japan, and South Korea, some areas are expected to see a decrease of 5°C below seasonal norms.

Although the cold waves are expected to be short-lived, they will serve as an early test of the resilience of electricity markets at the start of the season. While a strong El Niño is likely to bring a milder winter to the Northern Hemisphere overall, these waves show how even short periods of cold can cause sharp price fluctuations.

Europe

On Monday, benchmark gas futures in Europe exceeded €97 per MWh for the first time since the 2022 energy crisis, with gas storage levels not exceeding 75% compared to the usual 90% for the season.

“Markets are most concerned about synchronous cold waves in multiple regions with high energy demand,” said Andrew Pedrini, a meteorologist at Atmospheric G2.

According to models from the European Centre for Medium-Range Weather Forecasts (ECMWF), the cold will begin mid-week in France and Germany. Mediterranean and Balkan regions are already colder than usual for this time. In Paris, temperatures on Saturday will be 2.7°C below normal with a low of 4°C, and in Munich, just above zero. According to MetDesk models, wind production in northwestern Europe will start to decrease mid-week and continue to fall throughout the next week.

Asia

In Asia, the greatest deviation from the norm is expected in northern China and northern Japan: average temperatures may drop more than 5°C below seasonal norms, says Takahisa Nishikawa from Atmospheric G2. Heavy snowfall in northern China could increase heating demand while simultaneously limiting solar energy production. “Although these cold waves are relatively short-term, they could be an early test of energy demand in East Asia,” he said.

The cold will come under the influence of a high-pressure zone over the Urals: it will shift the jet stream south and open the way for very cold air into East Asia. Nishikawa noted that while El Niño, strengthening and potentially reaching record levels, is likely to bring a relatively mild winter to Asia, the risk of strong short-term cold waves remains. He recalled the strong El Niño in the 2023–2024 season, when Japan experienced several unusual cold spells.

In China, coal prices reached a three-year high after a fatal accident in May slowed production in the main coal province of Shaanxi. Meanwhile, the energy sector benefited from the weather: according to the National Energy Administration, residential electricity demand rarely decreased from the beginning of the year to September – rains and tropical cyclones reduced air conditioner use in the summer.