(Montel) Nordic power futures have failed to price in the launch of a 1.4 GW power cable from Norway to the UK in this year’s fourth quarter, analysts told Montel.
Norwegian TSO Statnett said on Friday that the NSL cable between Norway and the UK is set to start trial operations on 1 October, which is earlier than a previous estimate of “before the end of the year”.
“We have to adjust up our price expectations for Q4 because of this news. There is no doubt an earlier start of NSL will lift prices,” said chief analyst Sigbjorn Seland of StormGeo.
While Nordic futures for Q4 traded at EUR 30.25/MWh on Nasdaq, the UK equivalent traded at GBP 57.54/MWh, or around EUR 66/MWh on the EEX, suggesting strong exports from the Nordic region.
And the UK grid lacks the bottlenecks which have prevented full export on the Norway-Germany cable launched last autumn, said Seland, adding Nordic spot prices in Q4 were likely to out-turn EUR 4-5/MWh higher than current futures prices suggest.
Other analysts agreed.
“Q4 is priced too low in my opinion. The launch of NSL from October will increase possibilities for exports and lift prices,” said analyst Johan Sigvardsson of Swedish power supplier Bixia.
Tor Reier Lilleholt, chief analyst at Volue Insight, said full operation of the NSL cable in Q4 would lift Nordic power prices by EUR 1.3/MWh, compared with a scenario where it was not in operation. Regional prices in Norway’s NO2 bidding zone should be EUR 2/MWh higher, Lilleholt said.
In general, Lilleholt said Q4 prices in the Nordic region were currently trading EUR 7/MWh below his expectations for the period.
Reporting by:
Gert Ove Mollestad
gert@montelnews.com
13:14, Tuesday, 16 February 2021