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The prices rise in the European electricity markets and in the electricity, fuels and CO2 futures markets

AleaSoft, August 27, 2020. In the fourth week of August there were price rises in most of the European electricity markets, favoured by the increase in demand and gas futures, which exceeded €9/MWh after five months, and those of the CO2, which exceeded €28/t. Also the Brent, the coal and the electricity futures presented increases. In the German market, the prices fell due to the high wind energy production, which on August 26 registered the highest value since the beginning of March.

Photovoltaic and solar thermal energy production and wind energy production

The solar energy production decreased by 13% in the German market during the period from Monday, August 24, to Wednesday, August 26, compared to the average for the week ending on Sunday, August 23. On the contrary, in the rest of the markets analysed at AleaSoft, the production increased between 11% and 0.9%.

During the first 26 days of August, the solar energy production was higher than that of the same period of 2019 in all the markets analysed at AleaSoft. In the Iberian Peninsula it increased by 38%, while in the markets of France and Germany the increase was 10% in both cases. In the Italian market the increase in production was 8.0%.

For the week that began on Monday, August 24, the analysis carried out at AleaSoft indicates that the solar energy production in most markets will be lower compared to the previous week.

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

The average wind energy production from Monday to Wednesday of the fourth week of August increased by 96% in the German market compared to the average of the previous week. In the German market, the production of 923 GWh registered on Wednesday, August 26, the highest since March 10 of this year, stands out. In the French and Italian markets, the production with this technology increased by 41% and 34% respectively compared to the average of the third week of August. On the contrary, in the Iberian Peninsula the production decreased by 37%.

From August 1 to 26, the wind energy production increased by 25% in the Italian market compared to the same days of August 2019. In the rest of the markets, the production with this technology was between 4.8% and 10% higher, except in the Portuguese market where the production decreased by 18%.

The AleaSoft‘s analysis indicates that once the last week of the month is over, the total wind energy production will be higher in all the markets analysed at AleaSoft compared to that of the week of August 17, except in the Iberian Peninsula.

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

Renewable energy auctions

On August 24 and 25, the second solar energy auction was held in Portugal, in which the world record for the minimum price was once again broken, this time of €11.14/MWh. In total, 670 MW were awarded, the great winner being the South Korean company Hanwha Q‑Cells, which was awarded 315 MW divided into six lots, out of the 12 that were auctioned.

Electricity demand

During the first three days of the fourth week of August, the electricity demand increased in most European electricity markets compared to the same days of the week that began on Monday, August 17. The Italian market was the one that registered the greatest variation, of 14%. In the rest of the markets where there were rises in this period, the increases were between 9.2% and 1.4%. The labour activity is beginning to reactivate after the holiday period, which led to the increase in electricity consumption in these countries, despite presenting temperatures lower than those of the week of August 17 in some cases. On the other hand, in the markets of Great Britain, Belgium and the Netherlands, the demand fell between 5.3% and 3.0%. In these countries, the average temperature from Monday to Wednesday was less warm than that of the same period in the third week of August, which favoured the demand to drop.

At AleaSoft, the total demand at the end of the week is expected to continue the same trend presented at the beginning of the week.

The electricity markets observatories published at AleaSoft allow the hourly, daily and weekly analysis of the demand and other variables of the electricity markets.

AleaSoft - Electricity demand European countriesSource: 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

The electricity demand of Mainland Spain from Monday to Wednesday of the week of August 24 was 9.2% higher than that of the same period of the previous week. The factor that most influenced this rise was the increase in labour activity in the last week of August, in addition to average temperatures that were 0.8 °C higher than those of the same days of the week of August 17. At AleaSoft, the demand of the Spanish peninsula is expected to end the fourth week of August with values higher than those of the previous week.

The solar energy production in Mainland Spain, which includes the photovoltaic and solar thermal technologies, increased by 0.9% between Monday, August 24, and Wednesday, August 26, compared to the average of the previous week. In the year‑on‑year analysis, during the first 26 days of August, a 38% increase in production with these technologies was registered compared to the same days of 2019. For the week ending Sunday, August 30, the analysis carried out at AleaSoft indicates that the production will be lower than the total registered during the week of August 17.

The average level of the wind energy production in Mainland Spain for the first three days of the fourth week of August, decreased by 38% compared to the average of the previous week. In the year‑on‑year analysis, the wind energy production between August 1 and 26 was 10% higher than that registered for the same period of 2019. For this week, the AleaSoft‘s forecasting indicates that production with this technology will continue to be lower than that registered during the third week of August.

At the moment all nuclear power plants are underway and the nuclear energy production maintains a level close to 167 GWh per day.

AleaSoft - Daily balance electricity Spain demand productionSources: Prepared by AleaSoft using data from REE.

The hydroelectric reserves currently have 12 175 GWh stored, according to data from the Hydrological Bulletin of the Ministry for Ecological Transition and Demographic Challenge number 34, which represents a decrease of 499 GWh compared to the bulletin number 33.

European electricity markets

The first four days of the week of August 24 there were price increases in most of the analysed European electricity markets compared to the same period of the previous week. The exceptions were the EPEX SPOT market of Germany and the Netherlands, where the prices decreased by 7.4% and 2.1% respectively. On the other hand, the highest price rise, of 29%, was registered in the Nord Pool market of the Nordic countries and the EPEX SPOT market of Belgium was the one with the lowest increase, of 3.0%. In the rest of the markets, the price increases were between 7.6% of the IPEX market of Italy and 18% of the N2EX market of Great Britain.

The average price of the first four days of the fourth week of August was above €35/MWh in almost all the analysed markets, except in the Nord Pool market. This market was the one with the lowest price, of €15.67/MWh. In the rest of the electricity markets, the average prices were between €36.85/MWh of the EPEX SPOT market of Germany and €49.17/MWh of the N2EX market.

As for the daily prices, the first four days of the last week of August, they remained above €30/MWh in almost all the analysed European electricity markets. The exceptions were the Nord Pool market, with daily prices below €20/MWh, and the prices of August 26 in the markets of Germany, the Netherlands and Belgium, which that day were €17.89/MWh, €24.81/MWh and €28.60/MWh respectively.

On the other hand, on August 24, the daily price exceeded €50/MWh in the British market and on August 27, daily prices higher than €50/MWh were reached in the markets of Italy, Belgium, France and Great Britain. The highest daily price, of €61.77/MWh, was reached on Thursday, August 27, in the British market.

As regards hourly prices, on August 26 at hour 16 a negative price of ‑€3.82/MWh was reached in the German market. This price contrasts with the €90.00/MWh registered in this same market at hour 21 of Thursday, 27 August. Although this was not the highest value of the first four days of the week of August 24. The maximum hourly price of the considered period, of €110.64/MWh, was reached at the hour 19 of August 27 in Great Britain.

AleaSoft - European electricity market pricesSource: Prepared by AleaSoft using data from OMIE, EPEX SPOT, N2EX, IPEX and Nord Pool.

The price increases of the first days of the week of August 24 were favoured by the increase in demand in most of Europe and by the decrease in wind energy production in countries such as Spain and Portugal. On the other hand, in the German market there was a large increase in wind energy production that contributed to the decrease in prices in this market. Other factors that favoured the rises are the increases registered by the gas and the CO2 emission rights in recent days.

The AleaSoft‘s price forecasting indicates that at the end of the week of August 24, the average prices in all European markets will be higher than those of the third week of August. The week of August 31 will also start with price increases in most European markets. The exceptions will be the MIBEL market of Spain and Portugal and the N2EX market.

Iberian market

In the MIBEL market of Spain and Portugal, the average price of the first four days of the week of August 24 increased compared to that of the same period of the previous week. The increase was 12% in Portugal and 14% in Spain.

Due to this price increase, the average between August 24 and 27 was €40.41/MWh in the Portuguese market and €41.07/MWh in the Spanish market. On the other hand, the daily prices remained below €40/MWh for the first three days of the fourth week of August, but on Thursday, August 27, prices above this value were reached, of €45.33/MWh in Portugal and €46.25/MWh in Spain.

During the considered period, the increase in demand and the fall in wind energy production in the Iberian Peninsula favoured the increase in prices in the MIBEL market.

However, the AleaSoft‘s price forecasting indicates that the average price of the first four days of the week of August 31 will decrease, influenced by the recovery of the wind energy production in the Iberian Peninsula.

Electricity futures

So far this week of August 24, the prices of the electricity futures markets analysed at AleaSoft registered a general increase for the product of the last quarter of the current year. The EEX market of Spain was the one where the prices increased the least, registering a variation of 6.9% compared to the settlement of the session of Friday, August 21. The market with the greatest variation was the ICE market of the Nordic countries with an increase of 18%, followed by the NASDAQ market of the same region. However, in absolute terms, the ICE market of the Netherlands was the one with the highest increase, with a difference compared to Friday of the third week of August of €3.93/MWh.

The prices of the future for the next year 2021 also registered increases in all markets. In this case, as in the quarterly product, the Iberian Peninsula was the region in which the prices increased the least, both in the EEX market of Spain and in the OMIP market of Spain and Portugal, with variations of 3.5% and 3.6% compared to the settlement price of August 17. In this case, the ICE market of the Nordic countries was the one with the greatest variation too, although once again, it was not in absolute terms. In absolute terms, the ICE market of Belgium was the one with the highest rise, with an increase of €2.85/MWh.

AleaSoft - Table settlement price European electricity futures markets Q1 and Y1

Brent, fuels and CO2

The Brent oil futures prices for the month of October 2020 in the ICE market began the fourth week of August recovering from the decreases of the third week of the month. On Tuesday, August 25, a settlement price of $45.86/bbl was registered, the highest since the second week of March. However, on Wednesday, August 26, the price fell slightly to $45.64/bbl.

The closures of oil facilities in America due to the Hurricane Laura favoured the increase in prices in the fourth week of the month. However, despite the declines of the week of August 17, the levels of the crude oil reserves of the United States remain high. Additionally, concerns over rising COVID‑19 cases could also limit the price recovery.

On the other hand, the TTF gas futures prices in the ICE market for the month of September 2020, the first days of the fourth week of August registered an upward trend. As a result, on Wednesday, August 26, a settlement price of €9.15/MWh was reached. This price is 9.5% higher than that of Wednesday, August 19, and the highest in the last five months.

Regarding the TTF gas prices in the spot market, the first days of the week of August 24, they recovered from the decreases of the end of the week of August 17. The increases allowed reaching an index price of €8.94/MWh on Thursday, August 27, which is the highest since the beginning of the second half of March.

As for the API 2 coal futures prices in the ICE market for the month of September 2020, they began the fourth week of August with a change in trend compared to the end of the week of August 17. The prices increased to reach a settlement price of $48.95/t on Wednesday, August 26, thus recovering to the price registered on Tuesday, August 18, before the price drops of the last days of the third week of August.

Regarding the CO2 emission rights futures prices in the EEX market for the reference contract of December 2020, they registered a similar behaviour to that of the gas and coal futures. But Wednesday’s increase was much more modest. In this way, the settlement prices of Tuesday, August 25, and Wednesday, August 26, were €28.62/t and €28.63/t respectively. €28/t was not exceeded since the first fortnight of July.

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

AleaSoft analysis of the recovery of the energy markets at the end of the economic crisis

At AleaSoft a series of webinars “Energy markets in the recovery of the economic crisis” is being organised, which will be held on September 17 and October 29. In these webinars, the evolution of the European energy markets and the financing of renewable energy projects during the COVID‑19 pandemic, as well as the future perspectives taking into account the scenarios of recovery from the coronacrisis will be analysed. Another issue to be addressed is the importance of the forecasting in the audits and in the valuation of renewable energy portfolios. The webinars will feature speakers from Deloitte, Engie, Banco Sabadell and AleaSoft.

The long‑term price curves of the main European electricity markets were recently updated at AleaSoft, taking into account the impact of the coronavirus on the economies of the continent during the second quarter of the year and the scenarios of recovery from the economic crisis.

The observatories were developed at AleaSoft to analyse how the main European electricity, fuels and CO2 emission rights markets are evolving. This tool includes charts with daily updated data of the main variables of the markets.

Source: AleaSoft Energy Forecasting.

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