FR Base Power price (€/MWh)

  • Base Cal21
  • Base Cal22
  • Base Q220
  • Base Q320
  • Base Q420
  • Base Q121

EUA price (€/t)

  • Cal20
  • Cal21
  • Cal22

Coal Price ($/Tn)

  • Cal21
  • Cal22
  • Q220
  • Q320
  • Q420
  • Q121

Clean Spark Spread – Base (€/MWh)

  • Base Cal21
  • Base Cal22
  • Base Q220
  • Base Q320
  • Base Q420
  • Base Q121

Clean Dark Spread – Base (€/MWh)

  • Base Cal21
  • Base Cal22
  • Base Q220
  • Base Q320
  • Base Q420
  • Base Q121

FR Peak Power price (€/MWh)

  • Peak Cal21
  • Peak Cal22
  • Peak Q220
  • Peak Q320
  • Peak Q420
  • Peak Q121

PEGN Gas price (€/MWh)

  • Cal21
  • Cal22
  • Q220
  • Q320
  • Q420
  • Q121

Gas vs. Coal Price (€/MWh)

  • Gas + CO2 - Cal21
  • Coal + CO2 - Cal21
  • Gas + CO2 - Cal22
  • Coal + CO2 - Cal22

Clean Spark Spread – Peak (€/MWh)

  • Peak Cal21
  • Peak Cal22
  • Peak Q220
  • Peak Q320
  • Peak Q420
  • Peak Q121

Clean Dark Spread – Peak (€/MWh)

  • Peak Cal21
  • Peak Cal22
  • Peak Q220
  • Peak Q320
  • Peak Q420
  • Peak Q121

Market Analysis – June 2020


Prompt and month-ahead contracts:

FRA electricity demand averaged 49.6GW at the max in Jun20, up by 2GW m-o-m.  Such increase was mainly supported by slightly higher temperatures, especially during wk 26, and easing coronavirus restrictions (note that power consumption averaged 92% of normal after adjusting for weather impacts).

On the supply side, nuclear power production continued its decline, set at an average 30.9GW at the max (down by 4.5GW m-o-m) with EDF continuing maintenance works and 10-year inspections on some of its nuclear fleet. In addition, Fessenheim 2 reactor (0.9GW) was finally taken off the grid for decommissioning on Mon, Jun 29th, as part of the French government commitment to close another 12 reactors by 2035 under its plan to cut nuclear use to 50% of the country´s total installed power capacity mix. As for other technologies, gas power generation has been the only one on the up, by almost 2GW, to an average 4.2GW at the max. In fact, gas demand for CCGTs hit its highest level since mid-March. In terms of renewables, both hydro and wind power output were down by 1.1GW at the max, whereas solar power generation was almost stable (down by just 0.5GW at the max).

After reaching fresh record lows in May20, TTF spot contract, which had closed at EUR3.404/MWh on Powernext on May 31st, followed an overall bullish trend. Though the month started off with very healthy supply and high storage levels, all of it in the context of limited demand, maintenance works at NOR gas fields and a decline in both LNG sendouts and incoming deliveries, combined with low nuclear availability and falling wind power generation, resulted in the contract gaining some ground. Eventually, TTF spot contract closed at EUR5.792/MWh, up by EUR2.367 since our last analysis.

As for spot power prices, FRA power baseload contract, which had closed at EUR16.81/MWh on the EEX on Fri, May 29th, was significantly bullish, adding on average almost EUR11.00 m-o-m. Main reasons behind this increase have been concerns surrounding FRA nuclear power availability and low wind power output, coupled with slightly increasing gas prices. Eventually, the contract closed at EUR34.36/MWh on Tue, Jun 30th, whereas its equivalent peak load contract added on average EUR12.66 after closing at EUR38.53/MWh.

Re. month-ahead contracts, FRA Jul20 power baseload contract followed quite a bullish trend, supported by ongoing concerns re. nuclear power availability and forecasts of flagging LNG supply, with deliveries having been slashed by almost two thirds. This resulted in the contract adding on average EUR3.20 m-o-m after closing at EUR34.35/MWh. Its equivalent Aug20 contract followed a similar pattern and closed at EUR34.73/MWh.

Medium and long-term contracts:

FRA power curve contracts continued the bullish trend observed during our previous analysis. Despite fears of a resurgence in new Covid-19 cases, lingering concerns re. FRA nuclear power availably for the 2020/2021 winter season plus increasing emissions prices were the main factors behind this pattern. In fact, FRA Cal21 baseload contract closed at EUR48.70/MWh on the EEX on Tue, Jun 30th, up by an average EUR1.94, whereas its equivalent Cal22 contract added EUR1.31 after closing at EUR47.35/MWh. As for quarterly contracts, FRA Q320 baseload contract eventually settled at EUR35.32/MWh, up by an average EUR2.23, whereas its equivalent Q420 contract added on average EUR2.67 after closing at EUR61.47/MWh. Note here that the latter contract has soared by 38% since mid-March, placing FRA as the most expensive market in NWE for this coming winter.

In terms of underlying fuel costs, TTF Cal21 gas contract, which had closed at EUR11.931/MWh on Powernext on May 29th, remained pretty stable during the period under analysis, with settlement prices in the range of EUR11.818-12.536/MWh. In all, expectations of a high level of gas supply for next year and the economic uncertainty caused by the Covid-19 pandemic was very much offset by rising emissions prices and a bullish rally in oil contracts (note here that Brent Aug20 delivery contract added $3.31 after closing at $41.15/bbl). Eventually, TTF Cal21 contract closed at EUR12.523/MWh, up by 60cts since our last analysis.

As for coal prices, API2 Cal21 contract, which had closed at $51.82/Tn on the ICE on Fri, May 29th, reversed the downward trend observed during our previous analysis. In fact, the effects of high level of stocks and subdued demand were largely offset by: 1) concerns about RUS near-term supply, after a bridge collapsed and severed the rail connection with key RUS coal exporting hubs (an incident which was later on partially solved as the country´s producers found solutions to secure alternative port capacity); 2) an increase of freight costs and the decline of exports into the Atlantic region from RUS, Colombia and the US; 3) bullish technical signs and, 4) a sharp drop in FRA nuclear generation. As a result, API2 Cal 21 contract closed at $57.58/Tn on the ICE on Tue, Jun 30th, up by a monthly average of $2.61 ($5.76 in absolute terms).

Finally, re. emission prices, EUA Dec21 contract, which had closed at EUR EUR21.77/Tn on the EEX on Fri, May 29th, traded slightly sideways during the first half of Jun20, torn between a wave of speculative transactions and a slide of the financial markets and profit-taking movements. However, by the end of wk 25, the contract started to rise significantly driven by the optimism about the European economic recovery and measures announced by the EU´s central banks and the ECB to support the European economy. Also, a high level of speculative buying supported the observed rally. It´s worth noting that there was a lot of skepticism in the market about the sustainability of such advance, as it completely ignored fundamentals. Eventually, EUA Dec21 contract closed at EUR27.27/Tn, up by EUR5.50 since our last analysis.

Mica Sternhagen