Nena News

GERMAN – Forwards hit 2015 lows on ample supply

 (Montel) German power prices for July and the front quarter slipped to new 2015 lows on Tuesday amid flagging spot prices and signs of healthy supply availability, traders said.

The July and the Q3 contracts last traded down EUR 0.10 at EUR 29.75/MWh and EUR 30.25/MWh, their lowest levels so far this year on the EEX. The June contract last traded down EUR 0.03 at EUR 30.05/MWh, its lowest since late January.

Near term contracts came under pressure amid forecasts of strong renewable energy production over the coming days, including unseasonably strong winds until Friday.

Baseload for Wednesday fell almost 3% to EUR 27.75/MWh, down EUR 0.75 on where it traded in the previous session, while the peakload contract fell 5%, or EUR 1.60, to EUR 29.25/MWh.

Cologne-based analyst EuroWind expects 22.2 GW of solar and wind generation on average on Wednesday. Friday should see output fall to just above 10 GW before it climbs back to 17-19 GW at the weekend.

One German trader pointed to a weak trend in the spot market so far this year, with recent weekends in particular surprising the market with lower-than-expected prices.

The day ahead price of power has averaged EUR 31.24/MWh so far this year, around EUR 2.20 lower than 2015 settled on the EEX last year.

Wet summer?
“You have a lot of precipitation coming into the Alps in recent days, so quite good conditions in the hydro system,” said Bengt Longva, an analyst at Oslo-based Nena. “There is no sign of dry hot weather this summer.”

Although hydropower is a marginal source of production in Germany, a wetter outlook would pressure prices lower among key neighbouring countries including France, Switzerland and Austria, as well as those in the Nordic region, Longva said.

This in turn was likely to see more German summer price coupling with weaker prices, he added.

Swedish weather service SMHI expects around double the usual level of hydropower production in Scandinavia over the next two weeks, with output falling from as much as 6 TWh this week to 4 TWh next week.

The Nordic power Q3 contract tumbled 5% to a record low of EUR 21.80/MWh on Monday. It was last seen trading at EUR 21.92/MWh in the current session.


Reporting by:
Nathan Witkop
11:30, Tuesday, 5 May 2015