AleaSoft, June 11, 2020. The prices of most European electricity markets rose in the first days of the second week of June, some exceeding €30/MWh. On June 9, the German market reached its highest daily price since the beginning of March, of €36.68/MWh. This increase was mainly due to the increase in demand and the decrease in solar and wind energy production. The only market where prices fell in this period was MIBEL, where the demand decreased and the wind and solar energy production rose.
Photovoltaic and solar thermal energy production and wind energy production
The solar energy production increased by 14% in the Iberian Peninsula during the period between Monday, June 8, and Wednesday, June 10, compared to the average of the previous week. On the contrary, in the rest of the markets analysed at AleaSoft, decreases in production were registered during this period. In the German market, the production fell by 26%, while in the Italian market it fell by 11%.
The production with this technology during the 10 days elapsed in June was 27% higher in the Iberian Peninsula, compared to the same period of 2019. In contrast, in Germany it decreased by 16%, while in Italy and France the decreases were close to 2.0%.
In the whole of the week, the analysis carried out at AleaSoft indicates that the solar energy production will decrease in the German and the Italian markets.
The average wind energy production between Monday and Wednesday of this week of June 8 was higher than that registered last week in the Iberian and Italian markets, with increases of 23% and 9.3% respectively. On the contrary, in the German market it decreased by 68% and in the French market by 35%.
During the 10 days of June, the wind energy production was lower than that registered in the first 10 days of June 2019 in the markets of Germany, France and the Iberian Peninsula. The steepest decline was that registered in Portugal, of 35%, while in Germany it decreased by 15% and in France by 4.4%. On the contrary, during this month the wind energy production in Italy increased more than double.
The AleaSoft‘s analysis indicates that total wind energy production of the week will increase in the Iberian Peninsula compared to last week. On the contrary, for the rest of the markets a reduction in production with this renewable technology is expected.Source: Prepared by AleaSoft using data from ENTSO-E, RTE, REN, REE and TERNA.
The beginning of this week was greatly influenced by the drop in average temperatures in most of Europe. These decreases, which reached an average of 5.2 °C in Belgium compared to the first three days of last week, caused increases in electricity demand from Monday to Wednesday of this week of June 8 in most of the analysed European markets. In the Italian market the rise was 14%, but the predominant factor was the effect of the holiday of the Republic Day of Italy celebrated on Tuesday, June 2. The other most appreciable increases were those registered in Great Britain, Belgium and the Netherlands, which were above 8%. In the French and German markets, average temperatures at least 3.0 °C lower contributed to the rise in demand by 5.9% and 7.3% respectively. Meanwhile, in Portugal the demand registered a decrease of 3.9% due to the effect of the holiday of the Day of Portugal celebrated on Wednesday, June 10.
These demand data with hourly, daily and weekly granularity are accessible at the AleaSoft’s electricity demand observatories, where this and other variables of the European electricity markets can be analysed.Source: Prepared by AleaSoft using data from TERNA
The AleaSoft’s demand forecasting shows that the electricity demand of the markets of Europe will drop in the countries where Corpus Christi is celebrated this Thursday, June 11, such as Germany, Portugal and Italy. In the rest of the markets, in general the total of the week will be higher than that of the previous week.Source: Prepared by AleaSoft using data from ENTSO-E, RTE, REN, REE, TERNA, National Grid and ELIA.
Mainland Spain, photovoltaic and solar thermal energy production and wind energy production
During the first three days of this second week of June, the electricity demand fell by 1.5% in Mainland Spain compared to the same period of the previous week, despite the fact that average temperatures were around 3.2 °C lower and the change to phase 2 and phase 3 of the Spanish territory in the de‑escalation of the measures taken to combat COVID‑19, since this Monday, June 8. At AleaSoft it is expected that the total demand for this week will conclude being lower than that of last week.
The average solar energy production in Mainland Spain, which includes the photovoltaic and the solar thermal technologies, during the period between Monday, June 8, and last Wednesday, June 10, increased by 13% compared to the average of the previous week. In the year‑on‑year analysis of the production with this technology, an increase of 28% was registered in this market during the past 10 days of June. In the whole of the week, the analysis carried out at AleaSoft indicates that the production will increase compared to the total registered last week.
The average wind energy production during the first three days of the week increased by 20%, compared to last week’s average in Mainland Spain. In the year‑on‑year analysis, the production with this technology so far in June was 6.7% lower. For the total of the week, the analysis carried out at AleaSoft indicates that the production will end up being greater than that of the previous week.
The nuclear energy production between June 8 and 10 increased by 22% from the average registered the first three days of last week, due to the reconnection of unit 1 of the Ascó Nuclear Power Plant. The Trillo Nuclear Power Plant, which is expected to be restarted in the fourth week of June, and unit 1 of the Almaraz Nuclear Power Plant, which will be restarted in the coming days, are still disconnected from the electricity grid.Sources: Prepared by AleaSoft using data from REE.
The hydroelectric reserves currently have 15 852 GWh stored, according to data from the last Hydrological Bulletin of the Ministry for the Ecological Transition and the Demographic Challenge, which represents a decrease of 204 GWh compared to the previous bulletin.
European electricity markets
During the first four days of the week of June 8, the prices increased in most European electricity markets compared to those of the same days of the previous week. The exception was the MIBEL market of Spain and Portugal, with a decrease of 12%. On the other hand, the highest price increases, of 48% and 47%, occurred in the EPEX SPOT market of France and Belgium respectively. While the smallest increase was that of the Nord Pool market of the Nordic countries, of 0.6%. In the rest of the markets, the price increases were between 10% of the N2EX market of Great Britain and 37% of the EPEX SPOT market of Germany and the Netherlands.
The market with the lowest average price so far this week, of €3.81/MWh, was the Nord Pool market. While the market with the highest average, of €31.45/MWh, was the British, followed by the markets of Germany and the Netherlands, with prices of €30.87/MWh and €30.55/MWh respectively. The rest of the markets had average prices between €27.63/MWh of the Iberian market and €29.46/MWh of the Belgian market.
Regarding the daily averages for the first four days of the week, the German market reached the highest daily price in the analysed electricity markets, of €36.68/MWh, on June 9. This price is the highest in this market since the first fortnight of March.Source: Prepared by AleaSoft using data from OMIE, EPEX SPOT, N2EX, IPEX and Nord Pool.
The decrease in solar energy production and in some cases in wind energy production, as well as the increase in demand favoured the price increases of the first four days of the week of June 8 in most of the analysed European markets. The slight recovery in gas prices also led to this price behaviour.
The AleaSoft‘s price forecasting indicates that the first days of next week, of June 15, the price increases will continue in most markets.
The average price of the first four days of the week of June 8 decreased by 12% compared to that of the same days of the previous week in the MIBEL market of Spain and Portugal. This was the only European electricity market in which the price fell in the considered period.
These price drops in the MIBEL market are related to the increase in wind and solar energy production in Spain and Portugal, and in nuclear energy production in Spain, in addition to the drop in electricity demand in these countries during the first days of the week.
The average price from June 8 to 11 was €27.63/MWh for both Spain and Portugal, the second lowest in Europe after that of the market of the Nordic countries. However, on Wednesday, June 10, the daily price exceeded €30/MWh, reaching €30.72/MWh in both countries.
The AleaSoft‘s price forecasting indicates that MIBEL market prices will continue to decline in the rest of the days of this week influenced by the increase in wind energy production and the decrease in demand during the weekend. The first days of the next week of June 15 this trend is expected to continue.
The futures prices for the next quarter registered decreases from Monday to Wednesday of this week of June 8 compared to the session of last Friday, June 5, in most of the markets analysed at AleaSoft. The exceptions were the ICE market and the NASDAQ market of the Nordic countries, with increases of over 20% in both cases, and the ICE market of Belgium, with a slight increase of 0.2%. In the rest of the markets the decreases were between 0.7% of the ICE market of the Netherlands and 5.1% of the EEX market of Spain.
Regarding the product for the next year, the behaviour was similar. General decreases except in the markets of the Nordic countries, where the price increased by 2.1% and 2.3% in the ICE and NASDAQ markets respectively. The declines for the rest of the markets were between 0.8% of the EEX market of France and 2.3% of the ICE market of the Netherlands, which in this case is the one that registered the greatest reduction in price.
Brent, fuels and CO2
The Brent oil futures for the month of August 2020 in the ICE market, on Monday, June 8, registered a settlement price 3.5% lower than that of the previous Friday. However, the first days of this week, the prices remained above $40/bbl and were higher than those of the same days of the previous week. In addition, as of Tuesday, June 9, the upward trend was recovered and on Wednesday, June 10, a settlement price of $41.73/bbl was reached, 4.9% higher than that of the previous Wednesday.
The OPEC+ agreement to maintain the production cuts in July, the rise in official sale prices of Saudi Arabia on Sunday and the reduction in production in the Gulf of Mexico due to the tropical storm Cristobal favoured that the prices were above $40/bbl in the last days.
However, the concerns about the recovery in demand and the news about the increase in US crude reserves may exert their downward influence in the coming days.
Regarding the TTF gas futures in the ICE market for the month of July 2020, after reaching the highest price since May 11 on Friday, June 5, the prices reversed their trend and began to decline in the first days of this week of June 8. Thus, the settlement price of Wednesday, June 10, was €4.80/MWh, 9.9% lower than that of the same day of the previous week.
Concerning the TTF gas in the spot market, on Tuesday, June 9, an index price of €5.14/MWh was reached, 50% higher than that of the previous Tuesday and the highest since the first half of May. Subsequently, the prices fell again. But, the average for the first four days of this week is still 18% higher than that of the same period of last week.
On the other hand, the API 2 coal futures prices in the ICE market for the month of July 2020, in the first days of this week of June 8, began a downward trend. As a consequence, on Wednesday, June 10, a settlement price of $45.65/t was reached, 4.6% lower than that of Wednesday, June 3, which was the highest so far this month.
As for the futures of CO2 emission rights in the EEX market for the reference contract of December 2020, after last Friday, June 5, they reached the highest registered price since March 11, of €23.24/t, they started the week of Monday, June 8, with prices below €23/t. However, the settlement prices of the first three days of this week were higher than those of the same days of the previous week and this Wednesday, June 10, the settlement price was €22.91/t.Source: Prepared by AleaSoft using data from ICE and EEX.
AleaSoft analysis on the effects on the electricity markets due to the coronavirus crisis
In recent days, the settlement prices of the TTF gas and API 2 coal futures in the ICE market for the M+1 product and the index prices of the MIBGAS gas market were included in the energy markets observatory of the AleaSoft website. With these data the existing information is expanded, which includes other markets of fuels, of CO2 and the main European electricity markets. In the observatory, the evolution of the last weeks can be analysed using comparative hourly, daily and weekly charts.
The second auction of Portugal, which was scheduled for March and had to be postponed due to the coronavirus crisis, will take place in late August. The auction participants need to have reliable long‑term markets price forecasting.
Source: AleaSoft Energy Forecasting.