AleaSoft, July 19, 2021. The prices of all European electricity markets fell in the third week of July. Although at the beginning of the week prices that are among the highest in 2021 were reached, afterwards the trend was downward, and even on Sunday, July 18, negative prices were registered in some markets. The stop in the rises was favoured by lower demand and higher wind and solar energy production in many cases. The electricity, gas, CO2 and Brent futures prices also fell.
Photovoltaic and solar thermal energy production and wind energy production
The solar energy production during the third week of July increased by 12% in the Portuguese market, by 9.8% in the Spanish market and by 9.3% in the German market compared to the previous week. On the contrary, in the Italian market, the production fell by 18% and in the French market by 3.8%.
For the week of July 19, the AleaSoft‘s solar energy production forecasting indicates an increase in production in the Italian market. However, a reduction is expected in the markets of Spain and Germany.
During the week of July 12, the wind energy production increased by 64% in the French market compared to the previous week. In the Iberian Peninsula, the production rose by 34% while in the German market the increase was 18%. On the contrary, in the Italian market there was a drop in production with this technology of 18%.
For the fourth week of July, the AleaSoft‘s wind energy production forecasting indicates that it will be lower than that registered the previous week in all the markets analysed at AleaSoft.Source: Prepared by AleaSoft using data from ENTSO-E, RTE, REN, REE and TERNA.
In the week of July 12, the electricity demand continued to decline in most European markets compared to the previous week. During these seven days, most markets continued with the trend of the previous week, as anticipated in the AleaSoft’s report of July 12. The main decreases were registered in Italy and France, which were 5.6% and 3.1% respectively. In the case of France, this drop was influenced by the effect of the French National Day holiday of July 14. Once this effect was corrected, the decrease was 1.4%.
The AleaSoft‘s demand forecasting indicates that in the week of July 19, the electricity demand will increase in France, Spain and Portugal, while in the rest of European markets, the downward trend will continue.Source: Prepared by AleaSoft using data from ENTSO-E, RTE, REN, REE, TERNA, National Grid and ELIA.
European electricity markets
In the week of July 12, the average prices of the European electricity markets fell in a generalised way compared to those of the week of July 5, something that did not happen since several weeks ago. The decreases were between 15% of the EPEX SPOT market of France and 2.9% of the IPEX market of Italy.
The market with the highest weekly average was the British N2EX, which was the only one that exceeded €100/MWh, with an average of €104.32/MWh. The one with the lowest price was once again the Nord Pool market of the Nordic countries, with an average of €53.64/MWh.
In most markets, the day with the highest price of the week was July 13, when prices higher than €94/MWh were reached in all except the Nord Pool. The prices of this day were between the position three and five in terms of the highest prices of 2021 in the markets of Germany, France, Italy, Belgium and the Netherlands. On the other hand, in the market of the United Kingdom the day with the highest price was Monday, July 12. That day a price of €118.31/MWh was reached, the highest since mid‑April.
However, over the weekend prices fell in general. The day with the lowest price of the week in most markets was Sunday, coinciding with lower demand and high solar energy production. This situation allowed Sunday prices to remain below €50/MWh in the EPEX SPOT and Nord Pool markets. In addition, negative prices were registered that day at hours 15 and 16 in the markets of Germany, France, Belgium and the Netherlands. In the four markets, the price of the hour 15 of that day was ‑€1.04/MWh and that of the hour 16, ‑€5.00/MWh.
On the other hand, on Monday, July 19, prices increased again, exceeding €98/MWh in the MIBEL, IPEX and N2EX markets. In the case of the markets of Spain and Portugal, the price of July 19 is the third highest in the history so far.
The decline in demand and the increase in wind and solar energy production in most markets contributed to the declines registered in European electricity markets during the third week of July. In addition, the gas and CO2 emission rights prices, although they remained high, fell during the week compared to those of the previous week.
The AleaSoft‘s price forecasting indicates that in the week of July 19, prices will increase in most European markets, favoured by the decrease in wind energy production in Europe and in solar energy production in countries such as Germany and Spain.Source: Prepared by AleaSoft using data from OMIE, EPEX SPOT, Nord Pool and GME.
The electricity futures prices for the product of the last quarter of 2021 registered decreases in all the European futures markets analysed at AleaSoft. The largest percentage drop occurred in the NASDAQ market of the Nordic countries, when the session of July 16 settled 5.9% below the session of July 9. However, in absolute terms, the most marked decrease occurred in the EEX market of the United Kingdom, with a reduction of €3.67/MWh. The EEX market of Spain was the one with the lowest variation, with a drop of 1.4%.
The electricity futures for the next year 2022 had a behaviour similar to that of the quarterly product. The settlement prices fell in all the markets analysed between the sessions of July 9 and 16, with the EEX market of the United Kingdom being the one with the greatest reduction, this time in both absolute and percentage terms, with a decrease of 3.7%, although closely followed by the ICE market, also of the United Kingdom, with a decrease of 3.6%. For this product, the EEX market of France was where the smallest reduction was registered, with a decrease of 1.6%.
Brent, fuels and CO2
The settlement prices of Brent oil futures for the month of September 2021 in the ICE market registered declines in most of the sessions of the third week of July. As a consequence, on Friday, July 16, a settlement price of $73.59/bbl was reached. This price was 2.6% lower than that of the previous Friday. In the first hours of the session of Monday, July 19, the negotiated prices were still lower, remaining below $73.40/bbl.
The progress of the OPEC+ negotiations had an influence on the evolution of the Brent oil futures prices in the third week of July. Finally, on Sunday, July 18, the OPEC+ reached an agreement to progressively increase its production levels over the next five months. In this way, it seeks to limit the increase in oil prices that might endanger world economic growth. The results of these production increases, as well as the degree of compliance of the member countries, will be evaluated in December.
As for the TTF gas futures in the ICE market for the month of August 2021, the behaviour was similar to that of the Brent oil futures, registering increases only on Tuesday and Friday of the third week of July. Thus, the minimum settlement price of the week was that of Thursday, July 15, of €33.80/MWh. On Friday, after a 3.1% recovery, a settlement price of €34.84/MWh was reached, which was still 4.9% lower than that of the previous Friday.
Regarding the CO2 emission rights futures prices in the EEX market for the reference contract of December 2021, on Monday, July 12, they reached a settlement price of €51.71/t. This price was 11% lower than that of the previous Monday and the lowest since the third week of June. On Tuesday and Wednesday, prices recovered, influenced by the publication on July 14 of the Fit for 55 Package of the European Commission, with measures to reduce emissions. But prices fell again in the last sessions of the third week of July. As a result, on Friday, July 16, a settlement price of €52.89/t was registered, 2.5% lower than that of the same day of the previous week.Source: Prepared by AleaSoft using data from ICE and EEX.
AleaSoft’s analysis on the prospects for energy markets in Europe
On July 15, the webinar “Prospects for energy markets in Europe. European electricity markets: half‑year balance. Vision of the future: green hydrogen” organised by AleaSoft was held. In the webinar, the behaviour of the European electricity markets during the first half of 2021 was analysed, including markets that may represent opportunities for agents of the electricity sector, such as those of Poland, Greece, Romania and Serbia. The prospects for the energy markets for the second half of the year and the vision of the future on the role that green hydrogen will play in the energy transition were also analysed. The recording of the webinar can be requested here.
The next AleaSoft’s webinar “Energy markets in the recovery from the economic crisis one year later” will be held on October 7. In addition to the speakers from AleaSoft, there will be the participation of speakers from Deloitte. This webinar will be held one year after the one held in October 2020 in which speakers from this company also participated, so the analysis of the evolution of the European energy markets will have a year‑on‑year perspective. In addition, the prospects on the recovery from the economic crisis and on the renewable energy projects financing, as well as the importance of the forecasting in audits and portfolio valuation, will be analysed.
AleaSoft is offering a promotion of the long‑term prices curves forecasting report, with a 30‑year horizon, confidence bands and hourly granularity. These forecasts are available for most European markets, including those of Poland, Greece, Romania and Serbia.