(Montel) German front-week power prices advanced 4% on Tuesday morning as forecasts showed low wind power production and temperatures dropping to nearly 5C below normal.
The front-week baseload contract last changed hands at EUR 22.50/MWh at one broker, up by EUR 0.95 on the day. It has gained EUR 2.20 – or 11% – since last Thursday’s close.
“Prices are rising now because forecasts are now showing less wind for next week than previous outlooks,” Bengt Longva, analyst at Oslo-based consultancy Nena told Montel.
Wind power production is expected to average about 6 GW until next Thursday, according to Nena.
The weather is also expected to get cooler then, which will lead to higher power consumption for heating, a Switzerland-based trader said, adding that spot prices next week could average EUR 22.87/MWh.
Temperatures in Germany are forecast to rise from an average of 3.7C currently to 5.7C on Friday, before falling to 2.3C by Thursday next week, almost 5C below the seasonal norm, Nena data showed.
Yet if spot prices next week average at EUR 22.50/MWh, it would be the lowest level since the week ending 14 February.
“Power demand [next week] will, however, be lower than normal because it’s Easter week,” Longva said.
Friday next week is a public holiday in Germany and in several other European countries.
High solar
Further in, the day-ahead baseload contract last traded up EUR 0.20 on the day, at EUR 25.70/MWh, while peakload was EUR 0.25 lower at EUR 27.25/MWh.
Peakload prices are softening “because there will be quite a lot of solar output tomorrow”, said Longva.
Solar output is forecast to peak around 6 GW in the current session, rising to 18 GW on Wednesday and to 22 GW on Thursday, before dropping again to just 10 GW on Saturday, Nena data showed.
On Monday, German solar generation exceeded 20 GW for the first time in more than five months.
Meanwhile, the benchmark Cal 17 baseload contract last changed hands at EUR 21.60/MWh on the EEX, down by EUR 0.25 on the day, having touched an 11-day low of EUR 21.55/MWh earlier in the session.
Traders attributed the weakening front-year to lower coal and carbon prices.
Reporting by:
Iselin Rønningsbakk
iselin@montel.no
11:19, Tuesday, 15 March 2016