FR Baseload Power price (€/MWh)

FR Peak load Power price (€/MWh)

EUA price (€/t)

PEGN Gas price (€/MWh)

Coal Price ($/Tn)

Gas vs. Coal Price (€/MWh)

Clean Spark Spread – Baseload (€/MWh)

Clean Spark Spread – Peak load (€/MWh)

Clean Dark Spread – Baseload (€/MWh)

Clean Dark Spread – Peak load (€/MWh)

August 2021

Market Analysis

The update of our next Market Analysis will be published soon…

Note: due to the continued bullishness shown by the whole energy complex throughout the first half of September 2021, we shall also mention latest closing values available for contracts under analysis at the time of writing.

Prompt and month-ahead contracts:

FRA electricity demand averaged 47.9GW at the max during the month of August, down by almost 3GW when compared to July, the summer holiday period being the main factor behind this decrease. Only wk35 and beginning of wk36 showed values above the 51GW mark as a result of slightly warmer weather conditions.

In terms of generation, no major differences were noticeable during August when compared to the previous month. Nuclear power output averaged 40GW at the max, up by c. 0.7GW m-o-m. As for fossil-fuelled power generation, gas averaged 1.5GW, down from the 3GW registered in July, while coal remained stable at an average 0.2GW at the max. In terms of renewables, hydro power output averaged 8.2GW at the max (down by 1.5GW) while wind power generation continued to be rather scarce (set at an average 4.4GW at the max). Only solar power output was slightly up, by 0.4GW, and averaged 6.6GW at the max.

As for gas prices, TTF spot contract added an additional EUR7.802/MWh on average after closing at EUR47.633/MWh on Powernext on Tue, Aug 31st. Once again, the contract was supported by low wind power output, unplanned outages at some NOR gas fields and continued low gas storage levels. Speculations over Gazprom´s plans to launch Nord Stream 2 gas project in October 2021 had a bearish impact on gas prices, though this was short-lived. Note: at the time of writing, the contract had closed at a new multi-year high of EUR65.917/MWh (+38.2%) for Wed, Sep 15th, on prospects of a continued tight supply balance.

FRA spot power prices continued their upward trend, with FRA power baseload contract averaging EUR77.30/MWh after closing at EUR108.17/MWh on the EEX on Tue, Aug 31st. With the exception of Sun, Aug 8th, which showed negative prices due to increased wind power production in GER, the combination of an overall decline in wind energy output and increasing gas and coal prices exerted a bullish pressure on the contract. For its part, FRA peak load contract closed at EUR115.73/MWh. Note: FRA power baseload contract for delivery Wed, Sep 15th closed at a new multi-year high of EUR166.83/MWh (+58.66%) supported by ongoing low wind power output, increased demand, and extremely high gas prices.   

Regarding month-ahead contracts, FRA Sep’21 power baseload contract added an average EUR8.22 m-o-m after closing at EUR101.02/MWh on the EEX on Tue, Aug 31st. Its equivalent Oct’21 contract added an additional EUR12.28 after closing at EUR112.26/MWh. Extremely high gas prices on the back of: 1) lower than usual storage levels (note here that European market players were not able to fill unusually empty storage capacity with LNG this summer due to high Asian LNG prices); 2) uncertainty surrounding the start date of Nord Stream 2 and, 3) a tropical storm (Ida) heading towards the US Gulf Coast and likely to disrupt LNG exports, together with high emissions prices, were the main drivers behind this increase. Note: FRA Oct’21 power baseload contract closed at EUR148.06/MWh on Mon, Sep 14th (+35.8%), namely prompted by fears of supply issues in the months to come.

Medium and long-term contracts:

FRA power curve contracts prices were driven to new all-time highs in August 2021 by soaring fuels and emissions. FRA Cal22 power baseload contract added an average EUR10.04 m-o-m after closing at EUR89.65/MWh on the EEX on Tue, Aug 31st. By COB of Tue, Sep 14th, it had already added an extra 14.24%. Its equivalent Cal23 contract closed at EUR71.80/MWh, up by an average EUR5.88 m-o-m. As for quarterly contracts, FRA Q421 power baseload contract added an average EUR14.42 m-o-m after settling at EUR122.06/MWh on Tue, Aug 31st, plus an additional 36.03% by COB of Tue, Sep 14th.

In terms of underlying fuel costs, TTF Cal22 gas contract added an average EUR5.38 m-o-m after closing at EUR33.49/MWh on Powernext on Tue, Aug 31st. The contract maintained its bullish trend on the back of: 1) low natural gas storage levels; 2) uncertainty on the start date of Nord Stream 2 (note here that GER refused to withdraw the operator of the NS2 form the rules of the EU gas directive, under which Gazprom shall not be a sole owner of the pipeline and will be able to supply not more than 50% of the expected gas volume); 3) concerns surrounding US LNG supply caused by Hurricane Ida and, 4) increasing coal and emissions prices. By COB of Tue, Sep 14th, the contract had added an extra 7.4%.

As for coal prices, API2 Cal22 contract continued its upward trend and added an additional $12.31 on average after closing at $114.75/Tn on the ICE on Tue, Aug 31st, and after reaching new multi-year highs. The combination of 1) increased demand for coal in China and India amid dwindling stocks ahead of the winter demand season; 2) coal supply issues in Australia and South Africa and, 3) increasing gas and emissions prices resulted in the contract adding further gains and reaching record highs. By COB of Tue, Sep 14th, the contract had added an extra 13.6%.

Finally, re. emissions prices, EUA Dec21 contract added a total average of EUR3.26 m-o-m after closing at EUR60.76/Tn on the EEX on Tue, Aug 31st. The contract traded sideways although with an overall bullish trend. Soaring gas prices, bullish coal prices and a drop in allowances supply due to the summer holiday period lent significant support to the contract. On Tue, Sep 14th, the contract closed at EUR60.48/Tn, not before having reached a new all-time high of EUR62.75/Tn on Thu, Sep 9th.

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