AleaSoft, February 15, 2021. The cold temperatures registered in Europe in the second week of February caused the increase in demand and electricity markets prices. The exception was the MIBEL market, which for most of the first two weeks of the month registered the lowest price in Europe. In Portugal, four hours had a price of €0/MWh, which did not happen since 2016. The CO2 continued to break records, reaching above €40/t, and the Brent exceeded $62/bbl, which did not happen since July 2019.
Photovoltaic and solar thermal energy production and wind energy production
The solar energy production between February 8 and 14 increased in all the markets analysed at AleaSoft, compared to the previous week. In the Portuguese market, the production was more than double than that of the previous week, while in the French market it grew by about 45%. In the rest of the markets the increase in production was between 26% and 31%.
For the third week of February, the AleaSoft‘s solar energy production forecasting indicates that it will increase in the markets of Spain and Italy compared to the previous week. In the German market, the production is expected to remain with little variation.
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 second week of February, the wind energy production increased by 73% in the Italian market compared to the previous week. In the French market it increased by 11%, while in the Iberian Peninsula, the production with this technology increased by 9.8%. On the contrary, in the German market, the wind energy production was 39% lower than that registered the previous week.
For the week that began on Monday, February 15, the AleaSoft‘s wind energy production forecasting indicates that it will be lower than that registered the previous week in the Iberian Peninsula and in the Italian market. On the contrary, it is expected that in the rest of the markets analysed at AleaSoft, the production with this technology will increase, mainly in the German market.
Source: Prepared by AleaSoft using data from ENTSO-E, RTE, REN, REE and TERNA.
Electricity demand
The low temperatures, the winds and the snow caused by the storm Darcy since Monday, February 8, on the northern and eastern Europe caused increases in electricity demand during the week that began that day, compared to the previous week. In the Netherlands a weekly average temperature of ‑4.4 °C was registered, which was the lowest in that market since January 2013. In the markets of Great Britain, France, Germany and Belgium a decrease in average temperatures of more than 5 °C compared to the previous week was registered, with a drop of more than 10 °C in the last two markets.
The so‑called “beast from the east”, catapulted the demand of the French market 23% above that registered the previous week and in the markets of Great Britain and Belgium there were also considerable increases, of 7.3% and 4.8 % respectively. On the other hand, the demand maintained values similar to the previous seven days in Italy and Portugal.
For the week of February 15, the AleaSoft’s demand forecasting indicates that there will be decreases in most of the European markets and increases in Portugal.
Source: Prepared by AleaSoft using data from ENTSO-E, RTE, REN, REE, TERNA, National Grid and ELIA.
European electricity markets
The week of February 8, the prices of almost all the European electricity markets analysed at AleaSoft increased compared to those of the previous week. The exception was the MIBEL market of Spain and Portugal, with decreases of 22% and 24% respectively. On the other hand, the largest price rise, of 37%, was that of the EPEX SPOT market of France. In contrast, the lowest price increase was that of the N2EX market of UK, of 3.0%, followed by that of the IPEX market of Italy, of 5.9%. In the rest of the markets, the price increases were between 8.1% of the Nord Pool market of the Nordic countries and 33% of the EPEX SPOT market of Germany.
In the second week of February, the highest weekly average price was that of the United Kingdom, of €69.44/MWh. While in the MIBEL market of Portugal and Spain the lowest averages were registered, of €24.44/MWh and €25.27/MWh, respectively. In the rest of the markets, the prices were between €56.95/MWh of the Nord Pool market and €61.83/MWh of the French market.
On the other hand, the lowest daily prices in Europe were reached in the MIBEL market from February 5 to 15. Regarding the hourly prices, in the first four hours of Wednesday, February 10, the hourly price was €0/MWh in the MIBEL market of Portugal, which did not occur since February 2016.
Source: Prepared by AleaSoft using data from OMIE, EPEX SPOT, N2EX, IPEX and Nord Pool.
During the second week of February, the increase in demand in most markets favoured the rise in prices. Furthermore, the fall in wind energy production in Germany and the high CO2 and gas prices also contributed to the price increases in the European electricity markets. But the increase in renewable energy production in the Iberian Peninsula allowed the decrease in prices in the MIBEL market.
The AleaSoft‘s price forecasting indicates that in the entire week of February 15, the prices will fall in most markets, favoured by the increase in wind energy production in countries such as Germany and France and the general decrease in demand during the third week of February. However, in the Italian and Spanish markets, the prices are expected to increase influenced by the decrease in wind energy production in these markets.
Electricity futures
The European electricity futures for the next quarter had a predominantly downward behaviour, although with some exceptions, if the settlement prices of the February 12 session are compared with those of the previous Friday session, of February 5. In the ICE market and the NASDAQ market, both of the Nordic countries, there were increases of 4.6% and 4.7% respectively. An increase was also registered in the EEX market of Spain, although only €0.01/MWh. In the rest of the markets the decreases were between 0.1% of the EEX market of Germany and 1.6% of the ICE market of the Netherlands.
Considering the product of the calendar year 2022, a similar situation occurred. The prices rose in the ICE and NASDAQ markets of the Nordic region, with 2.3% and 2.4% respectively, and in this case the UK EEX market was added with a 0.3% increase. The price of the estimate of the annual product of the UK ICE market also rose, which is calculated at AleaSoft from the weighting of the monthly products and which resulted in an increase of 0.4%. In the rest of the markets, the decreases were between 0.5% of the ICE market of the Netherlands and 1.3% of the EEX market of France and Spain.
Brent, fuels and CO2
The Brent oil futures prices for the month of April 2021 in the ICE market, the second week of February continued with a generally upward trend. As a consequence, on Friday, February 12, a settlement price of $62.43/bbl was reached, which was 5.2% higher than that of the same day of the previous week and the highest since July 2019.
The upward trend in prices is being favoured by the OPEC+ production cuts and by the expectations about the improvement of the US economy. On the other hand, the cold temperatures are also affecting the supply levels in the United States. Furthermore, in the coming days, a possible increase in tensions in the Middle East could also exert an upward influence on the prices.
As for the TTF gas futures in the ICE market for the month of March 2021, on Monday, February 8, they reached a settlement price of €20.18/MWh, 11% higher than that of the previous Monday. However, from Tuesday to Thursday of the second week of February, the prices fell. On Thursday, February 11, the minimum settlement price of the week, of €17.37/MWh, was reached. This price was 4.1% lower than that of the previous Thursday and the lowest since the first week of January. Instead, on Friday the price recovered slightly to €17.62/MWh.
Regarding the settlement prices of the CO2 emission rights futures in the EEX market for the reference contract of December 2021, during the second week of February, they remained above €38/t. On Friday, February 12, the maximum settlement price of the week, of €40.02/t, was reached, 4.8% higher than that of the previous Friday and the highest in at least the last seven months.
Source: Prepared by AleaSoft using data from ICE and EEX.
AleaSoft analysis of the evolution of the energy markets and prospects from 2021
Next Thursday, February 18, the third part of the webinar “Prospects for the energy markets in Europe from 2021” organised by AleaSoft will be held. In addition to talking about the evolution and future prospects of the energy markets, special attention will be paid to the PPAs, comparing them with the renewable energy auctions and analysing how the coexistence of these two financing alternatives will be for the generators. There will be the participation of three speakers from Engie Spain: Daniel Fernandez Alonso, Head Of Energy Management and New Green Wholesale Business, Raúl Rodríguez Ascaso, Head of Business Development and Ignacio Sáenz Berruga, Head Of Origination and PPAs, in addition to Oriol Saltó i Bauzà, Manager of Data Analysis and Modelling at AleaSoft. Later, on March 18, the fourth part of this series of webinars will be held, with the collaboration of speakers from EY (Ernst & Young).
At AleaSoft various reports for the energy sector are also made, including the long‑term reports, which have complementary services associated with them to advise on their use. The company also offers European electricity markets forecasts in the short and mid term, a service that is beginning to be increasingly demanded by the renewable energy projects that came into operation.
Source: AleaSoft Energy Forecasting.
