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European power prices spike as French nuclear crisis deepens – Platts

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Nuclear plants closing cause prices to spike in Europe

Natural gas prices ramp up as combined-cycle-gas-turbine output jumps

European power prices spiked in early Nov. as unscheduled nuclear outages in France continued to squeeze supply margins across much of Northwest Europe, according to S&P Global Platts.

Natural gas prices also responded as combined cycle gas plants ramped up to capture rising prices, according to data released by S&P Global Platts, the leading independent provider of information and benchmark prices for the commodities and energy markets.

French week-ahead electricity Nov. 3 traded at €275 per megawatt hour (/MWh) in baseload and at €500/MWh in peakload. A period of relative calm followed until further doubts assailed the market mid-Nov., pushing baseload prices for Jan., 2017 up to €140/MWh.

Prices responded in the connected markets of the Belgium, Spain and the U.K., which tend to rely on cheap French imports to trim their own demand. Oct. day-ahead baseload prices in the three markets were up 58 per cent, 22 per cent and 18 per cent respectively month-over-month.

Continental European power prices, according to Platts Continental Power Index (CONTI)*, climbed over 40 per cent to €47.35/MWh in Oct. (having risen 18 per cent in Sept.) in a month-over-month comparison. On a year-over-year basis the index was up 11 per cent– the first time this year a monthly average CONTI price has exceeded that of last year.

S&P Global Platts’ regional analysis of European power and gas markets showed the following:

Germany: Oct. day-ahead power prices averaged €37.13/MWh, up 23 per cent month-over-month due in part to strong cross-border demand. On the near curve, Dec. baseload power was heard at €50/MWh Nov. 3, the highest for a German front-month since Jan. 2013, while Jan. baseload power closed that day at €52.25/MWh, levels not seen in over four years.

France: day-ahead and curve power prices surged into Nov. as the market digested further outage extensions to year-end for reactors with a combined capacity of 4.5 gigawatts. Month-ahead baseload power traded at €140/MWh in the morning of Nov. 3, having averaged €69/MWh through Oct. – up 81 per cent month-over-month and 65 per cent year-over-year.

U.K. power: average day-ahead prices in Oct. of £52.79/MWh were 18 per cent up on Sept. and 32 per cent up on Oct. 2015. National Grid issued a first capacity notice of the winter period Oct. 31, indicating tight margins, with a second issued Nov. 7 amid low wind production and a sharp drop in temperatures. Such has been the price inflation in France that imports of electricity to the U.K. fell to a five-year low in Oct., while GB-to-France capacity bids far outstripped France-to-GB bids in month-ahead auctions for Dec.

U.K. gas: UK day-ahead natural gas prices averaged 41.72 pence/therm in Oct., 50.3 per cent up month over month and up 5.74 per cent year over year. The period saw a remarkable drop in liquefied natural gas (LNG) infeed, from 1.442 billion cubic meters (Bcm) to 0.260 Bcm year over year, owing to strong pull for the fuel in Asia. Meanwhile gas-for-power demand more than doubled to 2.019 Bcm.

Dutch gas: on the TTF, continental Europe’s most heavily traded natural gas hub, average Oct. day-ahead gas prices rose 29.6 per cent to €15.74/MWh month over month but remained 13.5 per cent down year over year. Into Nov., the contract rose steeply to be assessed above €19/MWh Nov. 6 as colder temperatures boosted heating demand and gas-fired generation stepped up to offset the regional nuclear shortfall.

Platts Continental Europe and U.K. Day-Ahead Monthly Averages

Oct-16 Sep-16 Oct-15
CONTI* (€/MWh) 47.35 33.71 42.10
TTF (€/MWh) 15.74 12.15 18.21
U.K. Power (£/MWh) 52.79 44.83 39.88
U.K. Gas (pence/therm) 41.72 27.76 39.46

Source: Platts
NOTE: All figures are monthly averages of daily day-ahead contract prices as assessed by S&P Global Platts.

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