Platts: European Power Prices Sank to Near Four-Year Lows in May
European, U.K. Natural Gas Price Declines Limited by Rush to Replenish Depleted Stores
LONDON, June 5, 2013 /PRNewswire/ — Prices of day-ahead power in Europe and the United Kingdom continued to decline in May, as did day-ahead prices of European and U.K. natural gas, according to monthly data just released by Platts, a leading global energy, petrochemicals and metals information provider.
“European power prices fell last month as underlying demand weakness, reduction of industrial power due to national holidays and oversupply more than offset bullish late-month factors,” said Darren Stetzel, Platts power editor.
The Platts Continental Power (CONTI) Index* dropped 17.4% in May compared to April, from EUR45.20 per megawatt hour (/MWh) to EUR37.34/MWh, its lowest level since July, 2009. Power prices declined despite cold, overcast weather in the second half of the month, reduced production from renewable energy sources and nuclear outages.
“Nuclear power supply was somewhat limited in late May, with German nuclear power output down by a third, French nuclear power production slowed by the onset of the plant maintenance season and Belgian nuclear power output still down 2 gigawatts due to safety checks,” Stetzel said. Shortness of supply was believed to be temporary in view of news that Belgium’s Doel-3 and Tihange-2 nuclear reactors could return to service in early June.
Prices of long-dated power were also subdued last month. Year-ahead power in Germany remained close to its lowest price level in almost eight years, with calendar 2014 baseload power closing May 17 at EUR38.40/MWh.
“Even with historically low carbon prices and falling coal costs, German conventional thermal plant production continues to face price competition from the country’s wind and solar boom,” Stetzel said.
U.K. power prices in May averaged £48.34/MWh, down from the April average of £51.85/MWh.
In terms of natural gas, prices in the U.K. and on the Continent proved relatively stable across the month, as the need to refill depleted storage facilities served to slim price declines. Still, the U.K.’s average day-ahead natural gas price in May was down 5.5% from April, and the price at Continental Europe’s most liquid hub, the Dutch TTF, was down 4.9% month-over-month. Both U.K. and continental day-ahead gas prices were higher than in May 2012.
“Gas storage facilities were heavily slimmed by prolonged winter weather and the fact that liquefied natural gas cargoes were heading to Asia instead of northwest Europe,” Stetzel said. “U.K. and German gas companies were injecting heavily last month to replenish stores, but even at recent high daily injection rates, key strategic stores such as the U.K.’s Rough facility were well down on historical norms.”
Platts Continental Europe and U.K. Day-Ahead Monthly Averages May-13 Apr-13 May-12 CONTI (Euro/ MWh) 37.34 45.20 43.28 TTF (Euro/ MWh) 26.77 28.16 24.15 U.K. Power (GBP/MWh) 48.34 51.85 44.46 U.K. Gas (pence/ therm) 66.13 69.99 57.06 Source: Platts NOTE: All figures are monthly averages of daily day-ahead contract prices as assessed by Platts.
*Platts Continental Power (CONTI) Index is a demand-weighted baseload average of day-ahead contracts assessed in Germany, Switzerland, France, Belgium and the Netherlands. The Platts U.K. assessments reflect day-ahead contracts assessed for firm delivery of power on the high voltage network of England, Wales and Scotland, and at the National Balancing Point for gas. The Platts assessments reflect prices as determined between buyer and seller in the open physical markets.
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