Winter temperatures finally arrive and prices rise in Europe.
In the third week of January, prices of most European electricity markets increased compared to the previous week due to the increase in demand associated with the drop in temperatures. However, in the Spanish, Portuguese and Italian markets, where the wind energy production increased, price declines were registered. On the other hand, TTF gas futures reached a settlement price of €55.45/MWh on Monday, January 16, the lowest since September 2021.
Solar photovoltaic and thermoelectric energy production and wind energy production
During the third week of January, the solar energy production increased compared to the previous week in almost all European markets analysed at AleaSoft Energy Forecasting. The exception was the Italian market, with a decrease of 32%. On the other hand, the largest rise was that of the German market, of 26%. In the Portuguese market, the increase was 6.6%, while in the Spanish and French markets the increases were 9.2% and 9.1% respectively.
For the fourth week of January, the AleaSoft Energy Forecasting’s solar energy production forecasting indicates that the production might increase in the Spanish and Italian markets, while in Germany it might decrease.
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.
During the week of January 16, the wind energy production decreased compared to the previous week in the German and French markets by 53% and 57% respectively. Increases were registered in the rest of the markets. The largest rise, of 117%, was that of the Portuguese market, while in the Italian and Spanish markets the production with this technology increased by 9.5% and 63%, respectively.
For the week of January 23, the AleaSoft Energy Forecasting’s wind energy production forecasting indicates decreases in all analysed markets.
Source: Prepared by AleaSoft Energy Forecasting using data from ENTSO-E, RTE, REN, REE and TERNA.
Electricity demand
In the week of January 16, the electricity demand increased in all European markets analysed at AleaSoft Energy Forecasting compared to the previous week. The largest increase, of 20%, was registered in the French market, followed by the rise of 15% of the British market. On the other hand, the German market registered the smallest increase, less than 0.1%. In the rest of the markets, the demand grew between 3.3% of the Italian market and 11% of the Dutch market.
The general decrease in average temperatures compared to those registered during the previous week favoured the increase in demand for this period. The largest decreases, of more than 6.0 °C, were registered in the markets of Germany, Belgium, Great Britain and the Netherlands.
For the week of January 23, according to the demand forecasting made by AleaSoft Energy Forecasting, it is expected that it will continue to increase in most analysed European markets. However, the demand might decrease in Great Britain.
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 January 16, prices of most European electricity markets analysed at AleaSoft Energy Forecasting increased compared to the previous week. The exceptions were the MIBEL market of Spain and Portugal, with a fall of 51%, and the IPEX market of Italy, with a decrease of 0.4%. On the other hand, the highest price rise, of 101%, was that of the EPEX SPOT market of Germany. In the rest of the markets, the increases were between 48% of the N2EX market of the United Kingdom and 97% of the EPEX SPOT market of Belgium.
In the third week of January, the highest average price, of €173.92/MWh, was that of the British market. On the other hand, the lowest weekly averages were those of the Portuguese and Spanish markets, of €37.44/MWh and €37.46/MWh, respectively. In the rest of the analysed markets, prices were between €116.32/MWh of the Nord Pool market of the Nordic countries and €167.75/MWh of the Italian market.
Regarding hourly prices, on January 18, from 2:00 to 4:00, prices of €0.10/MWh were registered in the Spanish and Portuguese markets, the lowest since those reached in the first day of the year. On the other hand, on Friday, January 20, from 19:00 to 20:00, a price of €207.80/MWh was reached, the highest in these markets since the beginning of December.
On the other hand, on Monday, January 23, from 9:00 to 10:00, a price of €270.00/MWh was reached in the French market and this amount was exceeded in the German, Belgian and Dutch markets. In the case of the British market, on the 23rd, from 18:00 to 19:00, an hourly price of £255.06/MWh was registered. These prices were the highest in the last month in these markets.
During the week of January 16, the general increase in demand, favoured by the drop in temperatures, led to the increase in prices in European electricity markets. In addition, in markets such as Germany and France, the wind energy production fell, causing price increases of over 95%. On the other hand, in the Spanish, Portuguese and Italian markets, where the production with this technology increased, there were price decreases. Lower gas prices and higher solar energy production in the case of the MIBEL market also contributed to these decreases.
The AleaSoft Energy Forecasting’s price forecasting indicates that in the fourth week of January prices might continue to increase in most European electricity markets, influenced by the increase in demand and the general decrease in wind energy production. However, in the British market, where lower demand is expected, prices might decrease.
Source: Prepared by AleaSoft Energy Forecasting using data from OMIE, EPEX SPOT, Nord Pool and GME.
Brent, fuels and CO2
Brent oil futures for the Front?Month in the ICE market registered the weekly minimum settlement price, of $84.46/bbl, on Monday, January 16. This price was lower than that of the last session of the previous week, of $85.28/bbl. But, later, increases were registered and, on Friday, January 20, a settlement price of $87.63/bbl was reached. This price was 2.8% higher than that of the previous Friday and the highest since November 2022.
The relaxation of the control measures for COVID?19 in China favoured the upward trend in Brent oil futures prices during the third week of January due to the expectations about the recovery of the demand in this country.
As for settlement prices of TTF gas futures in the ICE market for the Front?Month, the third week of January they remained below €70/MWh. The weekly minimum settlement price, of €55.45/MWh, was reached on Monday, January 16. This price was 25% lower than that of the previous Monday and the lowest since September 2021. But the rest of the days of the week settlement prices recovered and exceeded €60/MWh. On Friday, January 20, the weekly maximum settlement price, of €66.90/MWh, was reached, which was 3.2% higher than that of the previous Friday.
The high levels of European reserves and the supply of liquefied natural gas by sea contributed to keeping TTF gas futures prices below €70/MWh in the third week of January. However, the drop in temperatures exerted its upward influence on prices during that week.
Regarding CO2 emission rights futures in the EEX market for the reference contract of December 2023, on Monday, January 16, the minimum settlement price of the week, of €77.57/t, was reached. This price was 4.8% lower than that of the previous Monday. But the rest of the week prices increased. As a result, the settlement price of Friday, January 20, was €85.08/t, 6.5% higher than that of the previous Friday.
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
On Thursday, January 19, the first webinar of 2023 on European energy markets of the series of monthly webinars of AleaSoft Energy Forecasting and AleaGreen was held. In the webinar, the usual analysis of the evolution of European energy markets, as well as prospects from 2023, was carried out. In addition, the vision of the PPA market in the current context, as well as novelties in the regulation of the Spanish electricity sector, were analysed. For this purpose, invited speakers from PwC and Aelec participated. Interested people can request the recording of the webinar on the AleaSoft Energy Forecasting website.
The next webinar in this webinar series will be on February 16. On this occasion, Alvaro Ruben Reyes Diaz, Senior Sales Manager at European Energy Exchange AG, will participate as a guest speaker. The webinar will analyse the evolution and prospects of European energy markets, as well as the importance of forward markets for the renewable energy development.
