Nena News

German power to rise EUR 1.50 on flow-based coupling

 (Montel) German day-ahead prices could increase by up to EUR 1.50/MWh as the country will export more power once flow-based market coupling starts on Wednesday, analysts told Montel on Monday.

TSOs and power exchanges will introduce flow-based coupling in Austria, Belgium, France, Germany, the Netherlands and Luxembourg in a move to curb price differences across borders by improving grid interconnection and the efficient use of existing infrastructure.

The new method of calculating cross-border flows will have an instant effect on prices in the countries affected, said analyst Bengt Longva at Nena.

“As soon as we get a flow-based system, more transmission capacity will be available to the spot markets, and more power will flow between the countries,” Longva said. “Because Germany is a net exporter of electricity to its neighbours, it will lead to higher prices there,” he added, without providing further details.

Other analysts agreed. By the end of June, German day-ahead prices should be EUR 1-1.50/MWh higher than current levels, said Blazej Radomski, analyst at Markedskraft.

Increased exports with the new coupling method will see German spot prices rise about EUR 1 higher on average year on year, said Tobias Federico at Energy Brainpool.

But elsewhere in the region, prices will soften, especially in the Netherlands and Belgium as these countries will import more electricity, analysts said. Dutch prices will fall by about EUR 2.50/MWh and Belgian prices by EUR 2.50-3.50/MWh, said analyst Anders Lund Eriksrud at Thema Consulting Group.

Increased cross-border flows will probably level out prices between France and Germany, as the former will import more power and the latter increase exports, said Longva.

Other analysts expected a more seasonal effect. Spot prices in France would fall in the winter months on increased imports from its neighbours, while the summer would see stronger prices as the country exported more, said analyst Ann-Kathrin Kotte at Icis Tschach.

Higher Nordic prices
Nordic power prices could rise by as much as EUR 10/MWh in peak winter demand on more expensive German power imports following the introduction of flow-based market coupling, Thema said on Monday.

The effect on average power prices would be modest, however, with Thema estimating Nordic power to rise EUR 0.2-0.3/MWh. And this figure could rise to EUR 0.3-0.4/MWh when new the interconnector capacity between the Nordic region and continental Europe is further strengthened by the end of this decade, it added.

So far this year, German-Austrian day-ahead prices have averaged EUR 30.47/MWh, while French prices have averaged EUR 41.07/MWh, Dutch prices EUR 42.29/MWh, Belgian prices EUR 46.19/MWh, and Nordic prices EUR 26.77/MWh.


Reporting by:
Iselin Rønningsbakk
09:18, Tuesday, 19 May 2015