SP Baseload Power price (€/MWh)

SP Peak load Power price (€/MWh)

EUA price (€/t)

MIBGas price (€/MWh)

Coal Price ($/Tn)

Gas efficiency: 52%

Coal efficiency: 38%

Gas vs. Coal Price (€/MWh)

Gas efficiency: 52%

Coal efficiency: 38%

Clean Spark Spread – Baseload (€/MWh)

Clean Spark Spread – Peak load (€/MWh)

Clean Dark Spread – Baseload (€/MWh)

Clean Dark Spread – Peak load (€/MWh)

October 2022

Market Analysis

Spot and short-term contracts:

Prices in European electricity markets decreased considerably during October due to a combination of falling gas prices and above-average weather conditions. In fact, the monthly average price in some electricity markets ended up being even lower than in the same month of the previous year. In Spain, for example, the gas cap mechanism had no effect during the last days of October, a first since its implementation back in June. In addition to falling gas prices, CCGTs activity also fell due to increased wind power production and France having slightly improved its nuclear power generation. Thus, the average daily market price (OMIE) in October was 127.21 €/MWh, 9.8% lower than in September 2022. Moreover, this price was 16.7% lower than in Germany and 28.9% lower than in France.

As a result of the above, October has seen the lowest electricity bill charges since August 2021, when the energy crisis began. The average bill for this month was €85.63, compared to €110.55 in September.

In gross terms, power demand in October totalled 19.5 TWh, making it the month with the lowest consumption since Red Eléctrica first started publishing data of national demand. Once again, at a peninsular level, the downward trend in demand – which was also observed in September – was the result of conservative consumption measures and mild temperatures. In the first ten months of 2022, demand was 3% lower than in the same period of the previous year.

On the generation side, wind power generation in October totalled 5.1 TWh and accounted for 23.1% of the production mix, an increase of 5% compared to September 2022. Meanwhile, solar power output, with almost 2 TWh recorded in October, decreased by 2% compared to last month, reaching a share of 9% of the total mix. Hydro generation also fell by 2% compared to the previous month although by c. 25% compared to October 2021 due to rather low rainfall levels. Once again, CCGTs were the predominant production technology, representing 33% of the mix (the same percentage as the previous month).

61% of generation was free of CO2 equivalent emissions, a figure driven by renewable production, which maintained the level from the previous month but increased by 6.8% compared to the same month in 2021.

Regarding gas prices in Spain (MIBGAS), and in line with the trend followed by other European markets, a drastic fall was observed during the second half of the month of October, reaching values below the 30 €/MWh mark. The MIBGas spot contract closed the month at 56 €/MWh, resulting in a monthly average of 64.8 €/MWh. Month-on-month decreases in European gas prices ranged between 10% in the MIBEL market and 65% in the Nord Pool market. The fall of gas prices (MIBGAS) below 40 €/MWh at the end of October resulted in the gas price cap mechanism not being applied as some days resulted in negative values (to be compensated).

Meanwhile, CO2 prices remained at an average level of around 70 €/Tn. However, while the first days of September showed the highest prices, in October it was the last week of the month, with values above the 80 €/Tn mark.

 

Medium- and long-term contracts:

OMIP Cal2023 contract price hovered around the 200 €/MWh mark during October, rising slightly at the end of the month, and closing at 212 €/MWh, 7% higher than a month ago. The resulting monthly average value was more or less in line with that seen last September. Nevertheless, if we look at the detail of quarterly contracts, we can observe a change of trend for the second half of next year 2023 (Q3 & Q4). Until mid-September, prices for the four quarterly contracts were very much in line. However, Q3 and Q4 started to follow an upward trend that has been maintained and even increased up till today. While Q1 and Q2 2023 have fallen from 197 €/MWh on average in September to 165 €/MWh and 184 €/MWh, respectively, in October, Q3 and Q4 have risen from an average value of 215 €/MWh in September to 230 €/MWh in October.

This is because the outlook for Europe’s gas supply does not look very promising in the longer run. As of today, European gas reserves are almost full, but they will be able to last one winter at the most. Thus, for the second half of 2023, if Europe does not find some other sources of gas supply or some other alternative means of production (considering the forecasts of rising coal prices and that both NordStream pipelines are not being used), a difficult winter is expected, with energy prices that will set record highs again.

Following the trend seen on the spot front, the MIBGas price for Cal2023 also decreased, and closed the month at 108 €/MWh. However, this price does not seem to reflect the current uncertainty surrounding winter 2023-2024. Although there has been a lot of renewable power production this month and gas reserves are full now, if the same storage levels are to be maintained for next winter so that demand is covered and prices are kept at their current levels, Europe must urgently seek some solutions.

Regarding CO2 emissions, forecasts for fossil-fuelled generation emissions are above their 2021 levels and growing. The 2022 picture among major CO2 emitters is mixed: emissions are forecasted to decrease in China (-0.9%) and the EU (-0.8%) and increase in the US (+1.5%) and India (+6%), with a +1.7% increase in the rest of the world combined. Therefore, reaching zero CO2 emissions by 2050 would now require a decrease of approximately 1.4 GtCO2 per year, highlighting the magnitude of actions required.

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Profesional Experience

Céline, a young and dynamic person, had a first experience in the tourism sector as a community manager at Loups du Gévaudan, in Lozère. She joined HES team in November 2021 to diversify her knowledge: learning about the energy sector, specialising in marketing strategies in order to improve the company’s customer relations and, at the same time, developing her skills in coordination and project management.

Education

Céline graduated in Spanish and English Language, Literature and Civilisation at La Sorbonne IV (2018). She also holds a master’s degree II in cultural projects and establishments management, with a special focus on international tourism. She also studied abroad at the University of London (England) and Universidad de Morón (Argentina).

Céline Haya Sauvage

Marketing Responsible

DSC_0323

“Decarbonization of the Energy and Transport sectors is arguably today’s main economic driver for the industry.”

Profesional Experience

His career started in civil engineering as a Project Manager in France, Martinique and Australia. Afterwards, he became the General Manager of a subsidiary in Venezuela. In 1992, he established Dalkia in Germany (district heating, cogeneration, and partnerships) and represented Véolia in Thailand. In 2000, he opened the commercial office of Endesa in France to take advantage of the liberalized retail market. From 2006, as a development Manager at Endesa France, he led Endesa’s plan for Combined Cycle generation in France and developed the wind and PV portfolio of Snet at the same time. Philippe Boulanger worked for 3 years at E.ON’s headquarters coordinating the company´s activities in France. He was strongly involved in the French hydro concession renewal project. As a Senior Vice President – Project Director at Solvay Energy Services from April 2012 to February 2014 he was in charge of the H2/Power to gas and European direct market access deployment projects. Philippe has been an HES expert since 2014.

Education

Philippe Boulanger holds engineering degrees both from the Ecole Polytechnique and the Ecole Nationale des Ponts & Chaussées (France) and has a combined experience of more than 25 years in energy and infrastructure. In addition to English, Mr. Boulanger is fluent in French, German & Spanish.

Philippe Boulanger

Electricity Expert

HES-Philippe-Boulanger

“The world is changing. New investors pay particular attention to the energy sector while historical actors adapt their position to the market.”

Profesional Experience

Antonio started his career in the electricity sector in 1991 working as a member of staff for the General Manager of Sevillana de Electricidad (Spain). In 1997, he was in charge of the commercial regulation at Endesa Distribution. In 2000, he joined Endesa’s European M&A department. He was appointed CEO of Endesa Power Trading Ltd in 2003. He became Head of Energy Management for SNET, France, in 2004 and was appointed CEO of this company in 2008. In 2009, he held the position of Head of Corporate Development for E.ON France. In 2011, he founded Haya Energy Solutions (HES), a consulting firm which assists companies in optimizing their value chain: from strategy definition to day-to-day operations, based on a strong experience and understanding of the energy industry. From 2015 to 2018, Antonio was Chairman and CEO of 2 French CCGTs (2x410MW), owned by KKR. At the end of 2018, he joined Asterion Industrial Partners, a dedicated infrastructure investment fund, as an Operating Partner.

Education

Antonio graduated from the Escuela Técnica Superior de Ingenieros of Seville (Spain) and holds an MBA degree from Deusto University (Spain).

Antonio Haya

CEO