Nena News

Fresh Olkiluoto delay “bullish” from Q2 – analysts

(Montel) Nordic power prices could rise from Q2 onwards since the fresh delay to the start-up of Finland’s 1.6 GW Olkiluoto 3 nuclear reactor will see a lack of test volumes which participants had previously expected, analysts said.

On Thursday, operator TVO said the reactor would not be ready to start commercial operation before March 2021, six months later than previously announced and 12 years behind the initial start-up date, due to the “slow progression of system tests and shortcomings in spare part deliveries”.

The fresh delay to the European pressurised reactor (EPR) would remove 1.5-2 TWh of supply that participants had anticipated to come to market during the unit’s test phase initially scheduled from June to October, said chief analyst Sigbjørn Seland at StormGeo.

“This is clearly bullish news for the Q2 and Q3 contracts next year, and also for the 2020 contract. Up until today we had reason to believe there would be quite healthy test production volumes already in Q3 next year,” said Seland, adding he was surprised the market had not reacted more to the
news on Thursday.

The Year 2020 contract at Nasdaq was last seen at EUR 36.10/MWh, down EUR 0.05 on the day, while the Year 2021 contract was up EUR 0.10 at EUR 33.75/MWh.

Seland said the news was also bullish for winter 2020/2021 prices, though it was unclear whether TVO would produce 1-3 TWh in trial period from November next year to March 2021.

“Based on experience so far, we cannot be sure they will manage to keep to [the revised] schedule,” said Seland.

Strong spot
Finnish spot prices were likely to continue to trade at a premium over other Nordic price zones, said Markus Herranen, market analyst at Finnish energy group Gasum.

The Finnish price area differential contract (Epad) for 2021 rose by EUR 0.87 to EUR 4.87/MWh after the TVO announcement, reducing the gap to the 2020 contract price of EUR 7.30/MWh.

The utility now plans to start loading nuclear fuel into the reactor in June next year and connect it to the grid in November. Commercial operation is due to start in March 2021.


Reporting by:
Olav Vilnes
13:09, Thursday, 19 December 2019