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)

June 2021

Market Analysis

Prompt and month-ahead contracts:

FRA electricity demand was quite stable when compared to the previous month. In fact, June saw demand average 51.3GW at the max, down 0.3GW when compared to May figures, on the back of slightly below-normal average temperatures for this time of the year.

In terms of generation, nuclear power output averaged 39.3GW at the max, up by almost 1GW m-o-m. Note here that nuclear fleet availability averaged c. 40.5GW, out of 61.4GW installed capacity. As for thermal based production, gas averaged 2.9GW at the max, up by 0.6GW, whereas coal remained quite stable, with some units being called upon at the end of the month. In terms of renewables, both hydro and solar power output showed similar values to those seen in May, averaging 10.9GW and 6GW at the max, respectively. By contrast, wind power generation was significantly down, by 4.1GW, and averaged 3GW at the max.

As for gas prices, TTF spot contract continued its upward trend, and closed at EUR33.717/MWh on Powernext on Wed, June 30th, adding an average EUR3.735 m-o-m. The contract was supported by below-normal wind power output levels – prompting more gas-to-power demand -, the start of the NOR gas infrastructure maintenance season, ongoing low gas storage levels and bullish emissions prices.

FRA spot power prices showed no sign of abatement and continued to post further gains, with FRA power baseload contract adding on average EUR18.23 after closing at EUR90.24/MWh on the EEX on Wed, June 30th. Weak renewables production, on the one hand, and soaring gas and emissions prices on the other, were the main factors behind this bullish trend. For its part, FRA peak load contract closed at EUR95.49/MWh, up by an average of EUR21.59 m-o-m.

Regarding month-ahead contracts, FRA Jul’21 power baseload contract was up by an average EUR8.45 m-o-m after closing at EUR83.65/MWh on the EEX on Wed, June 30th (and its equivalent Aug’21 contract adding an extra EUR10.35). Other than prospects of above-average temperatures likely to strengthen power-for-cooling demand in the weeks to come, the main driver was increased gas prices. In this respect we should note low gas inventories, planned outages at some LNG terminals, extended outages in NOR, concerns over a tight RUS gas supply outlook (after RUS´s Gazprom failed to book additional pipeline capacity via the Ukraine once again), plus high Asian gas prices, which resulted in LNG cargoes being diverted away from Europe.

Medium and long-term contracts:

FRA power curve contracts namely tracked spiking gas and emissions prices and rose to multi-year highs. FRA Cal22 power baseload contract added an average EUR3.28 m-o-m and closed at EUR73.65/MWh on the EEX on Wed, June 30th. Its equivalent Cal23 contract closed at EUR62.88/MWh, up by an average EUR1.04 m-o-m. As for quarterly contracts, FRA Q321 power baseload contract added an average EUR7.50 m-o-m after settling at EUR81.18/MWh on Mon, June 28th, whereas its equivalent Q421 contract closed at EUR98.94/MWh, up by EUR7.62.

In terms of underlying fuel costs, TTF Cal22 gas contract added an average EUR1.499 m-o-m after closing at EUR25.438/MWh on Powernext on Wed, June 30th. Overall, gas prices rose in tandem with bullish oil (with Brent Jul21 delivery contract adding an average $5.35 m-o-m after closing at $75.13/bbl on the ICE on Wed, June 30th), coal (with coal-fired generation becoming even more expensive) and emissions prices. Also, and more specifically, ongoing low gas storage levels across Europe and higher Asian LNG prices added to this bullish pattern.

As for coal prices, API2 Cal22 contract added an additional $4.23 on average after closing at $87.10/Tn on the ICE on Wed, June 30th, reaching multi-year highs. The combination of 1) increased demand for coal in China as its economy is starting to show some signs of recovery, 2) rising Newcastle coal prices (also reaching multi-year highs, hence providing support to the wider global coal market) and, 3) increasing gas, oil and emissions prices, resulted in the contract extending further gains. On the bearish side, note that resumption of exports by Cerrejón (Colombia) managed to slightly offset the increase in coal prices from mid-June onwards.

Finally, re. emissions prices, EUA Dec21 contract added a total average of EUR0.66 m-o-m after closing at EUR56.37/Tn on the EEX on Wed, June 30th. Although the trend followed was overall bullish, the contract kept trading sideways. On the downside, we should note the impact of the end of governments stimulus packages plus a larger-than-expected GER EUA allocation. On the upside, and other than tracking higher gas and coal prices, the contract was supported by the market awaiting 2021 free EUAs allocation and the approval by the European Parliament of the ‘Fit for 55’ draft legislation package. The new legislation – to be prepared and approved by the European Council by July 14th – will include, amongst others, changes to the EU ETS, 2030 RES and energy efficiency targets, and a new carbon border adjustment mechanism (CBAM).

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