AleaSoft, June 21, 2021. During the third week of June, average temperatures rose in most of Europe, causing an increase in electricity demand. This was coupled with the fact that gas prices continued to rise and that CO2 prices remain high, resulting in a further increase in electricity markets prices. The wind energy production increased considerably on Sunday in the Iberian Peninsula and Germany helping to lower prices that day. Brent continued to register all‑time highs.
Photovoltaic and solar thermal energy production and wind energy production
The solar energy production increased by 16% in the German market and by 4.7% in the Italian market during the week of Monday, June 14, compared to the previous week. On the contrary, in the markets of France, Portugal and Spain there were falls in production of between 16% and 33%.
For the fourth week of June, the AleaSoft‘s solar energy production forecasting indicates that it will increase in the Spanish market. However, a reduction in production is expected in the Italian and German markets.
Source: Prepared by AleaSoft using data from ENTSO-E, RTE, REN, REE and TERNA.
Source: Prepared by AleaSoft using data from ENTSO-E, RTE, REN, REE and TERNA.
During the third week of June, the wind energy production increased by 52% in the French market and by 13% in the German market compared to the previous week. On the other hand, in the markets of Spain, Portugal and Italy, the production was between 3.1% and 29% lower than that of the second week of June. However, on Sunday, June 20, there was a significant increase in production with this technology in the Iberian Peninsula and it almost tripled the average registered between Monday and Saturday. Also on that day, Germany’s wind energy production doubled the average of the previous six days.
For the week of June 21, the AleaSoft‘s wind energy production forecasting indicates an increase in all the markets analysed at AleaSoft compared to the previous week, except in the German market where little variation is expected.Source: Prepared by AleaSoft using data from ENTSO-E, RTE, REN, REE and TERNA.
The electricity demand of all the markets analysed at AleaSoft increased during the week of June 14 compared to that of the second week of the month, due to the increase in average temperatures in a large part of the European continent during this period. The Italian market was the one with the highest variation, of 8.6%, while the Spanish market registered the lowest increase, of 0.7%. In the rest of the markets, the demand grew between 2.6% and 4.6%.
The AleaSoft‘s demand forecasting indicates that the demand will decrease in a large part of the European markets during the week of June 21. To follow the evolution of the demand, with daily updated data, the energy markets observatories are available at AleaSoft.Source: Prepared by AleaSoft using data from ENTSO-E, RTE, REN, REE, TERNA, National Grid and ELIA.
European electricity markets
In the week of June 14, the average prices of most of the European electricity markets analysed at AleaSoft increased compared to the previous week. The largest price increases were those of the EPEX SPOT market of Germany and France, of 18% in both cases, followed by that of the EPEX SPOT market of Belgium, of 15%. The exception was the Nord Pool market of the Nordic countries, where prices fell by 11%. In the rest of the markets, the registered increases were between 5.9% of the MIBEL market of Spain and 9.6% of the N2EX market of the United Kingdom.
In the third week of June, the highest weekly average price was that of the N2EX market of the United Kingdom, of €93.24/MWh, followed by the averages of the MIBEL market of Portugal and Spain, of €85.69/MWh and €85.66/MWh respectively and of the IPEX market of Italy of €84.31/MWh. Meanwhile, the lowest average price during this period was that of the Nord Pool market of the Nordic countries, of €38.33/MWh. In the EPEX SPOT markets, prices were between €75.43/MWh of the German market and €76.94/MWh of the Belgian market.
From Monday, June 14, to Sunday, June 20, the daily prices in most of the markets were higher than those of the same days of the second week of June. However, in the Nord Pool market of the Nordic countries, the prices from Monday to Friday were lower, to be higher later, during the weekend, if compared with those of the previous weekend.
The behaviour of the prices from Monday to Wednesday was mostly upward, to decline later in the second half of the week. However, in the N2EX market of the United Kingdom, the prices during the weekend had an upward behaviour, with that of Sunday being the highest in the week, of €97.53/MWh.
The rise in prices was favoured by the general increase in electricity demand in addition to the high gas and CO2 prices that have been influencing since the beginning of spring.
On the other hand, the MIBEL market of Spain and Portugal was the only one where prices of Sunday, June 20, were lower than those of the previous Sunday, with a difference of close to €27/MWh, thanks to the increase in wind energy production registered that day. Hourly prices fell to €3.84/MWh at the hour 18 of that day. This contrasts with the fact that on Wednesday, June 16, at the hour 21, an hourly price of €105.51/MWh was reached, the highest since January 18.
The AleaSoft‘s price forecasting indicates that during the week of June 21, prices will be lower than those of the third week of June in most markets, influenced by the decrease in demand and the increase in renewable energy production in most of these markets.Source: Prepared by AleaSoft using data from OMIE, EPEX SPOT, Nord Pool and GME.
The electricity futures prices for the next quarter registered an increase in most of the markets analysed at AleaSoft during the third week of June, if the settlement prices of the sessions of June 11 and 18 are compared. The largest rise was registered in the ICE market of the Netherlands, with an increase of 4.0%. Increases of between 1.4% and 3.4% were also registered in the EEX market of France, Germany, Italy and the United Kingdom, as well as in the ICE market of Belgium and the United Kingdom. In contrast to these increases, there were price drops in the NASDAQ and ICE markets of the Nordic countries of 10% and 17% respectively.
Regarding the electricity futures for the year 2022, during the same period of time the behaviour was similar, the fall in prices of the ICE and NASDAQ markets of the Nordic countries, of 5.7% and the 4.8% in each case, also standing out in this case. In the rest of the analysed markets, the variation ranged between ‑1.0% and 1.3%.
Brent, fuels and CO2
The Brent oil futures for the month of August 2021 in the ICE market, the first days of the third week of June continued with the upward trend. On Wednesday, June 16, they reached a price of $74.39/bbl, which was 3.0% higher than that of the previous Wednesday and the highest in the last two years. The price fell by 1.8% on Thursday. But on Friday it rose again to $73.51/bbl.
The recovery in demand associated with the advance in vaccinations against COVID‑19 and the lifting of mobility restrictions is favouring the increase in Brent oil futures prices. However, the prospects of a possible rise in interest rates in the United States exerted their downward influence on prices on Thursday. At the meeting of the Federal Reserve of the United States, held on Tuesday and Wednesday of the third week of June, they discussed the possibility of advancing the increase in interest rates to curb the increase in inflation in the country. The increase in rates could be brought forward from 2024 to 2023, although there are more and more supporters of starting these increases in 2022.
As for the TTF gas futures prices in the ICE market for the month of July 2021, they began the third week of June with increases, although on Tuesday and Wednesday the prices fell. Despite these decreases, the upward trend recovered in the last days of the week and on Friday, June 18, a settlement price of €29.40/MWh was reached. This price was 5.6% higher than that of the same day of the previous week and the highest in the last two years.
The increase in wind energy production in countries such as Germany during the third week of June exerted its downward influence on prices. However, new interruptions of supply from Norway and still low gas reserve levels favoured the recovery of the prices at the end of the third week of June.
Regarding the CO2 emission rights futures in the EEX market for the reference contract of December 2021, on Monday, June 14, they reached the maximum settlement price of the week, of €52.90/t. This price was 2.8% higher than that of the previous Monday. However, on Tuesday prices began to fall and the rest of the days of the week the registered settlement prices were lower than those of the same days of the previous week. On Friday, June 18, this trend was reversed and the price increased by 1.9% compared to Thursday to €51.90/t.Source: Prepared by AleaSoft using data from ICE and EEX.
AleaSoft’s analysis on the prospects for the energy markets in Europe
Taking into account the context of high prices in the European electricity markets caused by the rise in CO2 and gas prices, AleaSoft launched a special promotion of the long‑term European electricity markets prices curves forecasting reports with the prospects for the next 30 years. The long‑term prices forecasts are necessary for the renewable energy projects financing, the risk and coverage management, the negotiation and closing of PPA, the portfolio valuation and audits, and the energy trading.
In the next AleaSoft’s webinar, which will be held on July 15, the evolution of the European electricity markets during the first half of 2021 will be analysed. Not only the MIBEL, EPEX SPOT, IPEX, N2EX and Nord Pool markets that are usually included will be analysed, but also other markets that may represent opportunities for the agents of the sector, for example Poland, Greece, Romania or Serbia. In addition, the prospects for the energy markets for the second half of the year and the vision of the future of the role of green hydrogen in the energy transition will be analysed.