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Second half of the year begins with price falls in European electricity markets supported by wind energy and gas prices

AleaSoft Energy Forecasting, July 8, 2024. In the first week of July, prices in most major European electricity markets fell compared to the previous week. Almost all markets registered hours with negative prices in the latter part of the week. Rising wind energy production, as well as lower gas prices and demand in some markets, contributed to the decline in prices. Photovoltaic energy broke records in Spain on the 3rd, and Portugal, France and Italy reached their highest daily production for a July month during the week.

Solar photovoltaic, solar thermoelectric and wind energy production

In the week of July 1, solar energy production increased compared to the previous week in the markets of the Iberian Peninsula and Italy. The Portuguese market registered the largest increase, which was 42%, followed by a 23% increase in the Spanish market. In the case of Spain, the analysis includes solar photovoltaic energy and solar thermoelectric energy. In the Italian market, generation increased for the second consecutive week, this time by 2.6%. On the other hand, the German and French markets registered declines in solar energy production. In the German market the fall was 28%, while in the French market 17%.

The Spanish market broke the all‑time record for solar photovoltaic energy production on July 3, with 202 GWh. In the first week of July, the Portuguese, French and Italian markets registered the highest daily solar energy production for a July month. The Portuguese market reached 21 GWh on July 2, while France and Italy set records on Friday, July 5, with 115 GWh and 128 GWh, respectively.

For the second week of July, according to AleaSoft Energy Forecasting’s solar energy production forecasts, in the German and Italian markets it will increase compared to the previous week, while it will decrease in the Spanish market.

AleaSoft - Solar photovoltaic thermosolar energy production electricity EuropeSource: Prepared by AleaSoft Energy Forecasting using data from ENTSO-E, RTE, REN, REE and TERNA.
AleaSoft - Solar photovoltaic production profile EuropeSource: Prepared by AleaSoft Energy Forecasting using data from ENTSO-E, RTE, REN, REE and TERNA.

In the first week of July, wind energy production increased in the main European electricity markets compared to the previous week. The German market registered the largest increase, 120%, followed by increases of 74% in the French market and 46% in the Portuguese market. The Spanish market registered a 16% increase, while the Italian market had the smallest growth, 8.3%. In the German, Spanish and Italian markets, this is the second consecutive week with increases in wind energy production.

According to AleaSoft Energy Forecasting’s wind energy production forecasts, in the week of July 8, it will fall across the board in the analyzed European electricity markets.

AleaSoft - Wind energy production electricity EuropeSource: Prepared by AleaSoft Energy Forecasting using data from ENTSO-E, RTE, REN, REE and TERNA.
 
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Electricity demand

During the first week of July, variations in electricity demand compared to the previous week had a heterogeneous behavior in the main European electricity markets. In the markets of the Netherlands, Portugal and Spain, demand increased. The Dutch market registered the largest increase, 9.9%. In Portugal and Spain, where demand rose for the third consecutive week, increases were 3.4% and 2.1%, respectively, coinciding with the recovery in demand following the St. John’s Day holiday on June 24, which is celebrated in some regions of both countries. In the British market, demand remained similar to that registered during the previous week. On the other hand, in the Belgian, French, Italian and German markets, demand decreased. In this case, the Belgian market had the largest decrease, 4.5%, followed by the drops in the French market, 2.2%, and the Italian market, 1.5%. The smallest drop in demand was in the German market, 0.3%.

During the week, average temperatures decreased in most analyzed markets compared to the last week of June. In the markets of Belgium, the Netherlands and Germany the decreases ranged from 4.1 °C in Belgium to 4.6 °C in Germany. In France and Great Britain the drops were 3.3 °C and 3.1 °C, respectively, while Italy had the smallest drop, 0.2 °C. On the other hand, the Iberian Peninsula was the exception, with average temperatures rising by 0.5 °C in Spain and 0.2 °C in Portugal.

In the week of July 8, according to AleaSoft Energy Forecasting’s demand forecasts, it will increase compared to the previous week in the markets of Italy, Spain, France and Great Britain. On the other hand, it will decline in the markets of Belgium, Germany, Portugal and the Netherlands.

AleaSoft - Electricity demand European countriesSource: Prepared by AleaSoft Energy Forecasting using data from ENTSO-E, RTE, REN, REE, TERNA, National Grid and ELIA.

European electricity markets

In the first week of July, prices in most major European electricity markets decreased compared to the previous week. The exception was the IPEX market of Italy, with an increase of 3.5%. The EPEX SPOT market of Germany registered the largest percentage price drop, 61%. In the other markets analyzed at AleaSoft Energy Forecasting, prices fell between 20% in the Nord Pool market of the Nordic countries and 41% in the EPEX SPOT market of Belgium.

In the first week of July, weekly averages were below €60/MWh in most analyzed European electricity markets. The N2EX market of the United Kingdom and the Italian market were the exceptions, with averages of €66.68/MWh and €105.50/MWh, respectively. On the other hand, the Nordic market and the French market registered the lowest weekly averages, €21.59/MWh and €26.82/MWh, respectively. In the rest of the analyzed markets, prices ranged from €35.35/MWh in the Belgian market to €56.16/MWh in the MIBEL market of Portugal.

Regarding hourly prices, most analyzed European markets registered negative prices on Saturday, July 6. The exception was the Italian market, which did not register negative prices in the first week of July. The British market also registered negative prices on July 4 and the Portuguese market on July 7. The rest of the analyzed markets registered negative prices on those two days. The German, Belgian and Dutch markets also registered negative hourly prices on July 5. The Dutch market registered the lowest hourly price of the first week of July, ‑€149.00/MWh, on Thursday, July 4, from 14:00 to 15:00. On the other hand, on Saturday, July 6, from 15:00 to 16:00, the Belgian market reached an hourly price of ‑€140.00/MWh, the lowest in this market since July 2019.

During the week of July 1, the decline in the weekly average gas price and the increase in wind energy production exerted a downward influence on European electricity market prices. In addition, electricity demand decreased in some markets. The increase in solar energy production in the Iberian Peninsula also contributed to the decline in MIBEL market prices.

AleaSoft - Wind farm

AleaSoft Energy Forecasting’s price forecasts indicate that, in the second week of July, prices will increase in the main European electricity markets, influenced by a decrease in wind energy production and increased demand in some markets.

AleaSoft - European electricity market pricesSource: Prepared by AleaSoft Energy Forecasting using data from OMIE, EPEX SPOT, Nord Pool and GME.

Brent, fuels and CO2

Brent oil futures for the Front‑Month in the ICE market began the first week of July with price increases. However, on Tuesday, July 2, they registered their weekly minimum settlement price, $86.24/bbl. On Wednesday and Thursday, prices increased again. As a result, on Thursday, July 4, these futures reached their weekly maximum settlement price, $87.43/bbl. According to data analyzed at AleaSoft Energy Forecasting, this price was the highest since May 1. After a 1.0% drop from the previous day, on Friday, July 5, the settlement price was $86.54/bbl, up 0.2% from the previous Friday. The weekly average settlement price was 1.2% higher than the previous week.

In the first week of July, expectations of increased demand due to summer travel, OPEC+ cuts and fears of the effects of the hurricane season on supply exerted an upward influence on Brent oil futures prices. However, concerns about economic evolution remain.

As for settlement prices of TTF gas futures in the ICE market for the Front‑Month, in the first week of July they remained below €34/MWh. The weekly average was 3.3% lower than the last week of June. On Tuesday, July 2, these futures registered their weekly maximum settlement price, €33.68/MWh. On Wednesday, July 3, there was a 3.0% drop compared to the previous day and the settlement price was €32.69/MWh. According to data analyzed at AleaSoft Energy Forecasting, this was the weekly minimum settlement price and the lowest since May 21. Although prices rose on Thursday, they fell again on Friday. On Friday, July 5, the settlement price was €33.07/MWh, 4.1% lower than the previous Friday.

High European reserve levels and weather conditions contributed to the decline in TTF gas futures prices in the first week of July. However, there are concerns about liquefied natural gas supply due to hurricanes in America in the coming months and increased demand for cooling in Asian markets.

Regarding CO2 emission allowance futures in the EEX market for the reference contract of December 2024, they increased compared to the previous week. On Monday, July 1, they registered their weekly minimum settlement price, €68.05/t. Prices continued to rise until Wednesday, July 3. On that day, these futures reached their weekly maximum settlement price, €70.76/t. According to data analyzed at AleaSoft Energy Forecasting, this price was the highest since June 11. In the last sessions of the week, settlement prices remained above €70/t. On Friday, July 5, the settlement price was €70.36/t, 4.3% higher than the previous Friday.

AleaSoft - Prices gas coal Brent oil CO2Source: Prepared by AleaSoft Energy Forecasting using data from ICE and EEX.

AleaSoft Energy Forecasting’s analysis on the prospects for energy markets in Europe, PPA and energy transition

The 46th webinar of the monthly webinar series of AleaSoft Energy Forecasting and AleaGreen will take place next Thursday, July 11. This webinar will analyze the evolution and prospects of European energy markets, price cannibalization, low prices, price factor of renewable technologies, the prospects for photovoltaic energy, batteries and hybridization, as well as PPA from the point of view of large and electro‑intensive consumers. The webinar will also include an explanation of the new AleaSoft divisions to boost renewable energy and energy transition. On this occasion, guest speakers from AEGE, Banco Sabadell, Axpo Iberia and CESCE will participate in the analysis table of the webinar in Spanish.

Source: AleaSoft Energy Forecasting.
 

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