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New Study an Examination of the Wholesale Gas Price Trends in Europe's Three Key Markets

Posted on: Friday, 8 February 2008, 06:00 CST

Research and Markets (http://www.researchandmarkets.com/reports/c82193) has announced the addition of Datamonitor's new report: Monthly Price Brief - A Review Of European Gas And Power Price Trends: October 2007 to their offering.

Introduction

The growing role of wholesale traded energy markets across Europe creates a greater need for players throughout the value chain to be aware of the latest market movements and developments. From the wellhead or power station gate to the end-user, volatility in the spot and forward price of power and gas is creating an increasingly challenging environment for all market participants.

Scope

An examination of the wholesale gas price trends in Europe's three key markets - the UK NBP, the Zeebrugge Hub and the Dutch TTF. An assessment of traded power prices in the UK, Belgian, Dutch, German and French wholesale power markets. Insight and analysis into the impact of wholesale markets on the wholesale / retail price interface.

Highlights

-The EU's third package of energy reforms proposes limited opportunities for new investment

-Infrastructure and storage positions are not a worry for either the UK or its European counterparts

-Northwest European power markets continued to rally through Q3.

Reasons to Purchase

-Establish the current level of wholesale and retail energy prices and the fundamental drivers behind movements in the traded value of gas and power

-Understand how wholesale pricing impacts different facets of the value chain, identifying the potential to limit risk through hedging strategies

-Forecast future developments in the traded price of gas and power in order to successfully take advantage of arbitrage opportunities

OUR VIEW

CATALYST

SUMMARY

ANALYSIS

The EUs third package of energy reforms proposes limited opportunities for new investment

The EUs third package of energy reforms proposes limited opportunities for new investment

Unresolved issues will be the key to achieving a successful single European energy market

The majority of TSOs are affiliated to a vertically integrated utility

Limits to network ownership have struck a raw chord with foreign investors

UK gas transmission charges account for a small percentage of end user bills

Cross-subsidization of network charges is a feature of European markets

Domestic power prices illustrate a positive but weak relationship

Large industrial prices for power customers are spread roughly around the sector average

Localized distribution companies far outnumber national transmission regimes

Localized distribution companies far outnumber national transmission regimes

Infrastructure and storage positions are not a worry for either the UK or its European counterparts

Infrastructure and storage positions are not a worry for either the UK or its European counterparts

Strategic European storage projects are not far behind the UK

Pipeline investment will increase capacity this winter, confirms UK energy regulator Ofgem

LNG projects are a priority in off-setting long-term concerns over security of supply

Private investment in LNG is evident from the major European suppliers

The Bacton-Zeebrugge interconnector acts as a bridge to European gas shippers

Strong LNG injectability reduces the tightness in UK gas supply

Total UK gas stocks are significantly higher than in 2006

The demand side response has been positive as consumption falls

Northwest European power markets continued to rally during Q3

Belgian power prices illustrated sustained stability this autumn

Short-term French baseload prices rose as month ahead contracts gained significantly over last month

Near-end instability in the German market highlights NW European price interdependence

Dutch power curves broke the NW Europe trend as prices fell

UK power prices showed bullish form as prices continued to rise

Gas prices rose as traders voiced concerns over winter 2007/08

NBP gas prices took an upward turn at the end of Q3

Near-end gas prices rose at the TTF with Brent crude indexation

The spot price pushed upwards as oil speculation impacted upon wholesale gas trading

APPENDIX

This brief builds upon Datamonitors extensive pricing proposition

Glossary

This brief contains a number of industry standard terms

Our analysis builds on other sources to provide greater insight

Further Reading

Extended Methodology

We assess the profitability of fossil fuel plants across northwest Europe

Our bespoke services can be tailored to your specific needs

Ask the analyst

Our consulting

Disclaimer

List of Figures

Figure 1: The independence of transmission systems

Figure 2: Network charges typically account for a small portion of the household domestic bill (October 2007)

Figure 3: Large industrial pricing and low network tariffs are the result of government subsidies to transmission operators (October 2007)

Figure 4: The UK is anomalous to the indicative grid access and end user bill relationship (October 2007)

Figure 5: Large power users benefit from lower network charges that feed through to lower end-user bills (October 2007)

Figure 6: Germany counts the highest number of power distribution companies due to its regional nature

Figure 7: European gas transmission and distribution numbers are stable, with the exception of Italy and Spain

Figure 8: Most EU member states are preparing for the shortfall in indigenous gas supplies by investing in LNG

Figure 9: Investment in adding capacity to LNG projects is at the forefront of energy companies business plans

Figure 10: Price signals and cross-border gas imports work in tandem to fulfill any shortfall in supply

Figure 11: The UKs regassification plants bring supply stability and reduce gas market uncertainty in the long-term

Figure 12: Higher UK gas stocks alleviate the pressure as winter 2007/08 approaches

Figure 13: A year-on-year comparison illustrates that mild and seasonally low temperatures can be reflected on the gas demand side

Figure 14: Northwest European power markets continued to rally during Q3

Figure 15: Belgian wholesale power prices firmed a touch on the near end of the curve as quarterly and annual prices continued to plateau

Figure 16: Near-end prices gained on last months for quarter ahead and significantly more for month ahead

Figure 17: The near-end of the German power curve characteristically followed the NW European market, as month ahead contracts rose sharply

Figure 18: Dutch power prices continued to fall this month for Quarterly and Year-Ahead contracts, the Month-Ahead price rose

Figure 19: The approach to winter 2007/08 has been illustrated by the UKs power curves rising at both ends

Figure 20: Gas prices rose as traders voiced concerns over winter 2007/08 30

Figure 21: In line with seasonal expectations, gas prices in the UK upturned in the first months of Q4, most notably in the month ahead contract

Figure 22: NW European gas producers experienced a sharp rise in prices due to current global oil uncertainties

Figure 23: Belgian spot contracts took a sharp rise, diverging from fundamentals as a result of oil market indexation

Figure 24: Energy pricing proposition

Figure 25: Generation spread methodology

Companies Mentioned:

Future plc

National Grid plc

For more information visit http://www.researchandmarkets.com/reports/c82193.

Source: Datamonitor

Source: Business Wire

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