AleaSoft Energy Forecasting, September 12, 2022. In the second week of September, European electricity markets prices fell in a generalised way, a trend that started the previous week. Declines were also registered in most European electricity futures markets. This behaviour was favoured by the decrease in gas and CO2 prices, as well as by higher wind and solar energy production in some markets. The electricity demand increased in most markets.
Solar photovoltaic and thermoelectric energy production and wind energy production
During the week starting on September 5, the solar energy production increased by 12% in the Italian market and 7.2% in the Iberian Peninsula, compared to the previous week. On the contrary, in the German market the production decreased by 23% and in the French market by 2.6%.
For the third week of September, the AleaSoft Energy Forecasting’s solar energy production forecasting indicates a reduction in production in Germany, Spain and Italy.Source: Prepared by AleaSoft Energy Forecasting using data from ENTSO-E, RTE, REN, REE and TERNA. Source: Prepared by AleaSoft Energy Forecasting using data from ENTSO-E, RTE, REN, REE and TERNA.
During the second week of September, the wind energy production increased by 69% in the Italian market and 61% in the French market, compared to the previous week. In the Iberian Peninsula, the production with this technology increased by 7.9%, despite the fact that a 13% reduction was registered in the Portuguese market. In the German market, the production fell by 7.1%, being, together with Portugal, the only markets that registered falls among the markets analysed at AleaSoft Energy Forecasting.
For the week that began on September 12, the AleaSoft Energy Forecasting’s wind energy production forecasting indicates an increase in production with this technology in the markets of Germany, Portugal and Spain. However, a reduction in wind energy production is expected in the markets of France and Italy.Source: Prepared by AleaSoft Energy Forecasting using data from ENTSO-E, RTE, REN, REE and TERNA.
In the week of September 5, the electricity demand increased compared to the previous week in most of the analysed European electricity markets. The largest increase was registered in the market of the Netherlands, which was 15%, followed by the 6.1% increase in the market of Portugal. In the British market, the demand grew by 4.6%, due to the recovery in labour after the holiday that was celebrated the previous week, on Monday, August 29. While in the markets of Germany and Italy the increase in demand was 3.6% and 2.1% in each case.
On the other hand, in the markets of Belgium, France and Spain, the demand fell by 1.6%, 1.1% and 1.0% respectively. In Belgium and France, the decreases were favoured by less warm temperatures registered from the second half of the week. In the case of Spain, the fall in demand was mainly due to the holidays of September 6 and 8, celebrated in several autonomous communities.
For the second week of September, according to the demand forecasting made by AleaSoft Energy Forecasting, the demand is expected to have a heterogeneous behaviour in the European markets. In the case of the markets of Portugal, Italy, Great Britain and the Netherlands, the demand is expected to increase. On the other hand, it is expected to decrease in the markets of Germany, France, Spain and Belgium.Source: Prepared by AleaSoft Energy Forecasting using data from ENTSO-E, RTE, REN, REE, TERNA, National Grid and ELIA.
European electricity markets
In the week of September 5, prices of all European electricity markets analysed at AleaSoft Energy Forecasting decreased compared to the previous week, continuing the trend of the previous week in which falls were registered in most markets. The largest drop in prices was that of the EPEX SPOT market of France, of 25%. On the other hand, the smallest decrease, of 3.1%, was that of the Nord Pool market of the Nordic countries. In the rest of the markets, the price drops were between 6.0% of the MIBEL market of Spain and Portugal and 22% of the N2EX market of the United Kingdom.
In the second week of September, the highest average, of €468.28/MWh, was that of the IPEX market of Italy, followed by that of the French market, of €432.13/MWh. On the other hand, the lowest weekly averages were those of the Spanish and Portuguese markets, of €159.69/MWh in both cases. This is due to the gas price cap applied in the MIBEL market. In the rest of the markets, prices were between €307.84/MWh of the Nord Pool market and €403.17/MWh of the German market.
Although the MIBEL market prices were the lowest, part of the consumers must pay a higher price as compensation for the gas price limitation applied in this market. In the Spanish market, the average of this price decreased to €263.54/MWh in the week of September 5.
During the week of September 5, weekly averages of gas and emission rights prices lower than those of the previous week favoured the decline in European electricity markets prices. In addition, the wind energy production increased compared to the previous week in Spain, France and Italy. The solar energy production also increased in the Spanish and Italian markets.
The AleaSoft Energy Forecasting’s price forecasting indicates that in the week of September 12 prices of most European electricity markets might continue to decrease. This trend will be favoured by the increase in wind energy production in the German and Iberian markets.Source: Prepared by AleaSoft Energy Forecasting using data from OMIE, EPEX SPOT, Nord Pool and GME.
During the second week of September, electricity futures prices for the next quarter fell in most of the markets analysed at AleaSoft Energy Forecasting. The ICE market of the Nordic countries and the NASDAQ market of the same region were the exceptions, with increases of 3.1% and 2.4%, respectively, between the sessions of September 2 and 9. In the rest of the markets, prices fell between 8.8% in the EEX market of France to 25% registered in the OMIP market of Spain and Portugal.
As for the product of the next year 2023, prices had a similar behaviour, as decreases predominated, although with more exceptions. In the ICE market of the Netherlands and Belgium and the EEX market of Germany and Italy, prices increased, while in the rest of the markets prices registered decreases, which reached up to 19% of the markets of Spain and Portugal in OMIP and EEX.
Brent, fuels and CO2
Brent oil futures for the Front‑Month in the ICE market began the second week of September with an increase in the settlement price of 2.9% compared to the previous Friday. Thus, on Monday, September 5, the weekly maximum settlement price, of $95.74/bbl, was reached, although this was 8.9% lower than that of the previous Monday. In fact, throughout the second week of September, settlement prices lower than those of the same days of the previous week were registered. The weekly minimum settlement price, of $88.00/bbl, was registered on Wednesday, September 7. This price was 8.8% lower than that of the previous Wednesday and the lowest since January 24.
The OPEC+ met on Monday, September 5, when it agreed to reduce its production in October. This favoured the rise registered that day. However, concerns about the evolution of the demand continued to exert their downward influence during the second week of September.
As for settlement prices of TTF gas futures in the ICE market for the Front‑Month, they began the second week of September with a recovery of 15% compared to the settlement price of the last session of the previous week. But, subsequently, price declines occurred again. As a result, the settlement prices of the second week of September were lower than those of the same days of the previous week. The weekly minimum settlement price, of €207.09/MWh, was reached on Friday, September 9. This price was 3.5% lower than that of the previous Friday and the lowest since August 12.
In the second week of September, news about the possibility of capping gas prices in Europe exerted its downward influence on prices. The prospects of a possible drop in demand also contributed to the price declines.
Regarding settlement prices of CO2 emission rights futures in the EEX market for the reference contract of December 2022, they fell in the second week of September and they were below €70/t almost every day. On Friday, September 9, the weekly minimum settlement price, of €66.08/t, was reached. This price was 15% lower than that of the previous Friday and the lowest since March 7. The falls of the second week of September were influenced by fears of a possible market intervention, as well as by concerns about the evolution of the demand from the industry.Source: Prepared by AleaSoft Energy Forecasting using data from ICE and EEX.
AleaSoft Energy Forecasting’s analysis on the prospects for energy markets in Europe and the renewable energy projects financing
Next Thursday, September 15, the September edition of the monthly webinars of AleaSoft Energy Forecasting and AleaGreen will be held, which will be the number 25. On this occasion, Jorge Simão, COO at OMIP, and Pablo Villaplana, COO at OMIClear, will participate, who will explain the operation of the Iberian Energy Market and the most important products. In addition, they will explain the importance of forward markets for hedging and for the renewable energy development. Fernando Soto, Director‑ General of AEGE, will also participate in the analysis table, who will speak about the renewable energy PPA auctions with electro‑intensive consumers that are expected to take place in the coming months. In addition, Oriol Saltó i Bauzà, Associate Partner at AleaGreen, will analyse the evolution of the electricity markets in recent weeks, as well as the prospects for the coming autumn and winter. At the analysis table, in which all the topics analysed in the webinar will be discussed, Antonio Delgado Rigal, CEO of AleaSoft Energy Forecasting, will also participate.
The webinar of October 20 is also being prepared, with speakers from Deloitte, as in the October editions of the previous two years. The webinar will analyse the current state of the renewable energy projects financing and the importance of the forecasting in audits and portfolio valuation. The analysis of the European energy markets will also be updated taking into account the most recent developments. The usual speakers from AleaSoft Energy Forecasting will also participate in this webinar.
Source: AleaSoft Energy Forecasting.