European power prices continued to decline in January

Louise Smyth

A mid-month cold snap could not prevent Continental European power prices dipping again in January, according to data released by Platts, the leading independent provider of information and benchmark prices for the commodities and energy markets.

European power prices, according to the Platts Continental Power Index (CONTI)*, declined 0.88% to €32.08 per megawatt hour (MWh) in January compared to December. On a year-over-year basis the index was down 8.43% in January.

Meanwhile an uptick in natural gas-for-power generation and a late-month oil price rally could not prevent natural gas prices from tumbling heavily in January.

The UK day-ahead gas price was down 6.4%, while continental Europe’s most liquid gas trading hub --  the Dutch Title Transfer Facility (TTF) – saw day-ahead gas prices fall nearly 12% on the month in January. Year over year, U.K. and TTF day-ahead gas contracts were 30% lower in value.

Platts’ regional analysis of European power and gas markets showed the following:

Germany: day-ahead prices in January averaged €29.55/MWh, up 4% month over month as this winter’s first significant cold spell and below-average wind power saw spot prices spike to their highest level in more than a year.  The cold snap proved short and sharp, with price sentiment turning bearish again in late January and into February as wind output ramped up above 20 gigawatts (GW).

France: day-ahead prices fell 2% month over month to €34.49/MWh, and were down 18% year over year. Hydro generation picked up in the third week of the month, running at 14 GW during peak hours, compared to levels below 10 GW during the rest of the month.

UK power: average day-ahead prices rose 5% month over month, supported by a few days of chilly, still weather that saw baseload power rise to £48.40/MWh January 18. Rising temperatures and much stronger wind power output thereafter limited inflation of prompt prices and by early February the base contract had dipped below £33/MWh.

UK gas: National Balancing Point (NBP) day-ahead gas prices fell 6.4% month over month and 30.6% year over year despite a surge in gas-fired generation. Gas-for-power consumption rose 45% month over month and 52% from this same period a year ago. By late January, local-distribution-zone natural gas demand had fallen back below seasonal norms, with mild, windy conditions reducing the need for combined cycle gas generation.

Dutch gas: on the TTF trading hub, the day-ahead natural gas prices averaged €13.88/MWh in January, down 11.73% on month and 29.43% on year. Prompt gas prices shrugged off the mid-January cold spell, with supply-side flexibility more than adequate to deal with a few days of increased demand. Storage withdrawals were up by 5% on the year in January to 2.1 billion cubic meters (Bcm), while imports from Norway rose by 2% to 1.1 Bcm.

Platts Continental Europe and UK Day-Ahead Monthly Averages

                                            Jan-16          Dec-15        Jan-15

CONTI (€/MWh)                  32.79           33.08           35.81

TTF (€/MWh)                      13.88            15.73           19.67

UK Power (£/MWh)             36.08             34.44           39.14

UK Gas (pence/therm)        31.99             34.18           46.11

Source: Platts

NOTE: All figures are monthly averages of daily day-ahead contract prices as assessed by Platts.

* The Platts CONTI is a demand-weighted baseload average of day-ahead contracts assessed in Germany, Switzerland, France, Belgium and the Netherlands. The Platts U.K. assessments reflect day-ahead contracts assessed for firm delivery of power on the high voltage network of England, Wales and Scotland, and at the National Balancing Point (NBP) for gas. The Platts assessments reflect prices as determined between buyer and seller in the open physical markets. 

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