The rise in European energy markets prices continues with winter just around the corner.
In the second week of December, European electricity markets prices increased, continuing the upward trend of recent weeks as temperatures drop. In the British market, £1585.82/MWh was reached in one hour of Monday the 12th, and daily prices exceeded €400/MWh on various occasions in most markets. Among the causes of the rises is the increase in demand in several markets, and in gas and CO2 prices.
Solar photovoltaic and thermoelectric energy production and wind energy production
During the week of December 5, the solar energy production increased compared to the previous week in Germany and France, with increases of 26% and 27% respectively. On the other hand, in Spain, Portugal and Italy, the production fell by 55%, 47% and 3.9% respectively. Precisely in Italy on Saturday, December 10, a production of 7 GWh was registered, which is the minimum daily production of the last two years.
The AleaSoft Energy Forecasting’s solar energy production forecasting indicates that increases in solar energy production are expected for the week of December 12 in Germany and Spain.
Source: Prepared by AleaSoft Energy Forecasting using data from ENTSO-E, RTE, REN, REE and TERNA.
Source: Prepared by AleaSoft Energy Forecasting using data from ENTSO-E, RTE, REN, REE and TERNA.
Regarding wind energy production, during the second week of December there was an increase compared to the previous week in Spain, Portugal and Italy, the latter being the most notable, of 39%. However, in Germany and France the wind energy production decreased by 20% and 37% respectively.
According to the AleaSoft Energy Forecasting’s wind energy production forecasting, during the week of December 12 an increase in production with this technology is expected in most European markets, with the exception of Italy.
Source: Prepared by AleaSoft Energy Forecasting using data from ENTSO-E, RTE, REN, REE and TERNA.
Electricity demand
During the week of December 5, the electricity demand behaved heterogeneously in the European markets analysed at AleaSoft Energy Forecasting when compared to the previous week. On the one hand, in the markets of Italy, Spain, Portugal and Germany the demand decreased. The largest decreases were registered in Italy and Spain, of 6.4% and 6.0% respectively, followed by the drop of 1.2% in Portugal and 0.3% in Germany. In the case of the markets of Italy, Spain and Portugal, the decreases in demand were favoured by temperatures slightly higher than those of the previous week and the decrease in labour due to the holiday of December 8, the Day of the Immaculate Conception. In Spain, the holiday of December 6, Constitution Day, also influenced.
On the other hand, in the markets of France, Great Britain, Belgium and the Netherlands, the demand increased. The largest increase was registered in the French market, which was 11%, followed by the 8.5% rise of the British market. In the markets of Belgium and the Netherlands, the increase was 4.9% and 3.1% respectively. The decreases in temperatures in these countries during the analysed period favoured the increase in demand in the corresponding energy markets.
For the week of December 12, according to the demand forecasting made by AleaSoft Energy Forecasting, the demand is expected to increase in all analysed European markets due to the fact that average temperatures will continue to drop in most of these countries. In the case of Spain, Italy and Portugal, it will be favoured by the recovery in labour after the holidays of the previous week.
Source: Prepared by AleaSoft Energy Forecasting using data from ENTSO-E, RTE, REN, REE, TERNA, National Grid and ELIA.
European electricity markets
In the week of December 5, prices of all European electricity markets analysed at AleaSoft Energy Forecasting increased compared to the previous week. The highest price rise, of 13%, was that of the EPEX SPOT market of France, while the smallest increase was that of the Nord Pool market of the Nordic countries, of 2.3%. In the rest of the markets, the increases were between 3.1% of the IPEX market of Italy and 11% of the EPEX SPOT market of Belgium.
In the second week of December, the highest average price, of €398.57/MWh, was that of the French market. On the other hand, the lowest weekly averages were those of the MIBEL market of Portugal and Spain, of €148.65/MWh and €149.04/MWh, respectively. In the rest of the analysed markets, prices were between €306.36/MWh of the Nordic market and €390.71/MWh of the Belgian market.
When taking into account the adjustment that some consumers have to pay due to the limitation of the gas price in the Iberian market, the average, of €237.49/MWh, continued to be lower than €300/MWh, unlike the averages of the rest of the markets.
Regarding hourly prices, on Monday, December 12, between 18:00 and 19:00, a price of £1585.82/MWh was reached in the N2EX market of the United Kingdom, the highest since November 15, 2021. On December 12, prices above €650/MWh were also registered in the Belgian and French markets. The highest, of €753.00/MWh, was registered between 9:00 and 10:00 in the French market. This price was the highest since September 1 in France.
As for daily prices, during the second week of December, prices above €400/MWh were registered on various occasions in most markets. In the case of the British market, on Monday, December 12, a price of £570.60/MWh was reached, the second highest in history after that registered on August 26 of this year.
During the week of December 5, the rise in prices of TTF gas in the spot market and of CO2 emission rights compared to the previous week exerted an upward influence on European electricity markets prices. The decrease in wind energy production in markets such as Germany and France and the drop in solar energy production in Spain, Italy and Portugal also contributed to the registered price increases. In addition, the electricity demand increased in some markets, such as France and Belgium, where the highest average prices were registered.
The AleaSoft Energy Forecasting’s price forecasting indicates that in the third week of December prices might continue to increase in most European electricity markets, influenced by the increase in demand.
Source: Prepared by AleaSoft Energy Forecasting using data from OMIE, EPEX SPOT, Nord Pool and GME.
Brent, fuels and CO2
During the second week of December, settlement prices of Brent oil futures for the Front?Month in the ICE market registered a downward trend. As a result, the settlement price of Friday, December 9, was $76.10/bbl. This price was 11% lower than that of the previous Friday and the lowest since December 22, 2021.
Concern about the evolution of the global economy exerted its downward influence on Brent oil futures prices in the second week of December. The new, less stringent, measures to control the spread of the coronavirus in China were not reflected in price increases. On the other hand, the recent increase in COVID?19 infections in this country further threatens demand levels.
As for TTF gas futures in the ICE market for the Front?Month, during the second week of December settlement prices above €130/MWh were registered. The weekly maximum settlement price, of €149.24/MWh, was reached on Wednesday, December 7. This price was 1.9% higher than that of the previous Wednesday and the highest since October 13. On Thursday the price fell by 6.9%, but on Friday it increased again. As a result, on Friday, December 9, a settlement price of €139.11/MWh was registered, which was still 2.6% higher than that of the previous Friday.
The drop in temperatures and the increase in the use of gas in electricity generation favoured prices to remain above €130/MWh, despite the fact that gas reserves are still at high levels.
Regarding CO2 emission rights futures in the EEX market for the reference contract of December 2022, settlement prices of the second week of December were higher than those of the same days of the previous week. The maximum settlement price of the week, of €88.67/t, was reached on Thursday, December 8. This price was 4.0% higher than that of the previous Thursday and the highest since August 26.
Source: Prepared by AleaSoft Energy Forecasting using data from ICE and EEX.
AleaSoft Energy Forecasting’s analysis on the prospects for energy markets in Europe and the valuation of renewable energy projects
Next Thursday, December 15, at 10:00 CET, the last webinar of the year 2022 of the series of monthly webinars organised by AleaSoft Energy Forecasting and AleaGreen will be held. In the webinar, the speakers Oriol Saltó i Bauzà and Alejandro Delgado Fornaguera, both Associate Partners at AleaGreen, will carry out an analysis of the evolution of the markets in the year that is about to end, as well as the main measures taken by European governments to alleviate the effects of the energy crisis and the high markets prices.
In the analysis table of the Spanish version of the webinar, Gonzalo de Cossío Tweddle, co?founder of Inti Ura, and Jon Arregi, CEO of Meatze, will participate, who will analyse solutions to avoid the price cannibalisation and renewable energy curtailments in little interconnected systems, using practical cases in LATAM as examples.
The webinar will also analyse the long?term vision of the future of the European energy markets in 2050, and some tools of AleaSoft Energy Forecasting and AleaGreen for the risk management and business opportunities, for the renewable energy assets valuation for PPA and audits, in addition to the online platform Alea Energy DataBase (AleaApp) for the compilation, visualisation and analysis of energy markets data.
