S&P Global Platts – Prices Spike Higher as French Nuclear Crisis Deepens

Published Nov 21, 2016
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S&P Global Platts reports that European power prices spiked higher in early November as unscheduled nuclear outages in France continued to squeeze supply margins across much of Northwest Europe.

Natural gas prices also responded as combined cycle gas plants ramped up to capture rising prices, according to data released by S&P Global Platts, independent provider of information and benchmark prices for the commodities and energy markets.

French week-ahead electricity November 3 traded at EUR 275 per megawatt hour (/MWh) in baseload and at EUR 500/MWh in peakload. A period of relative calm followed until further doubts assailed the market mid-November, pushing baseload prices for January, 2017 up to EUR 140/MWh.

Prices responded in the connected markets of the Belgium, Spain and the UK, which tend to rely on cheap French imports to trim their own demand. October day-ahead baseload prices in the three markets were up 58%, 22% and 18% respectively month-over-month.

Continental European power prices, according to Platts Continental Power Index (CONTI)*, climbed over 40% to EUR 47.35/MWh in October (having risen 18% in September) in a month-over-month comparison. On a year-over-year basis the index was up 11% -- the first time this year a monthly average CONTI price has exceeded that of last year.

S&P Global Platts’ regional analysis of European power and gas markets showed the following:

Germany: October day-ahead power prices averaged EUR 37.13/MWh, up 23% month-over-month due in part to strong cross-border demand. On the near curve, December baseload power was heard at EUR 50/MWh November 3, the highest for a German front-month since January 2013, while January baseload power closed that day at EUR 52.25/MWh, levels not seen in over four years.

France: day-ahead and curve power prices surged into November as the market digested further outage extensions to year-end for reactors with a combined capacity of 4.5 gigawatts. Month-ahead baseload power traded at EUR 140/MWh in the morning of November 3, having averaged EUR 69/MWh through October – up 81% month-over-month and 65% year-over-year.

UK power: average day-ahead prices in October of GBP 52.79/MWh were 18% up on September and 32% up on October 2015. National Grid issued a first capacity notice of the winter period October 31, indicating tight margins, with a second issued November 7 amid low wind production and a sharp drop in temperatures. Such has been the price inflation in France that imports of electricity to the UK fell to a five-year low in October, while GB-to-France capacity bids far outstripped France-to-GB bids in month-ahead auctions for December.

UK gas: UK day-ahead natural gas prices averaged 41.72 pence/therm in October, 50.3% up month over month and up 5.74% year over year. The period saw a remarkable drop in liquefied natural gas (LNG) infeed, from 1.442 billion cubic meters (Bcm) to 0.260 Bcm year over year, owing to strong pull for the fuel in Asia. Meanwhile gas-for-power demand more than doubled to 2.019 Bcm.

Dutch gas: on the TTF, continental Europe’s most heavily traded natural gas hub, average October day-ahead gas prices rose 29.6% to EUR 15.74/MWh month over month but remained 13.5% down year over year. Into November, the contract rose steeply to be assessed above EUR 19/MWh November 6 as colder temperatures boosted heating demand and gas-fired generation stepped up to offset the regional nuclear shortfall.

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