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European power prices hit 32-month high as fuels and carbon rise

European power prices hit 32-month high as fuels and carbon rise


PARIS: European electricity prices for year-ahead delivery hit a 32-month high on Tuesday, pushed up by rises in fuel and carbon emission permit prices after France and Germany said they would seek agreement on EU carbon market reforms by November.

The benchmark German Cal’18 baseload power contract for 2018 delivery rose 2.32 percent to 34.43 euros ($40.69) a megawatt-hour (MWh), its highest level since November 2014.

A trader said several factors including gains in fuel and carbon prices provided support, while another said was also speculative buying in the Cal’18, which was outperforming other contracts.

The less liquid French year-ahead contract rose 1.61 percent to 41.15 euros/MWh.

Fuel prices rose alongside stronger U.S. crude oil, with coal cif Europe for 2018 delivery adding 1.59 percent to $80.10 a tonne, its highest level since October 2014.

December 2017 expiry EU carbon allowances, which coal-fired power generators must hold to offset their carbon emissions, rose 8.78 percent to 6.44 euros a tonne, an eight-month high.

France and Germany said on Monday they would work together on taking measures to reinforce carbon pricing in the European electricity industry and want an agreement on carbon market reforms by November.

Shares in French utility EDF rose 3 percent and were among the top gainers in the SBF120 index due to the possible carbon pricing reinforcement.

Germany’s deputy Economy Minister Rainer Baake said on Tuesday that the country would have to shut 25 gigawatts (GW) of coal-fired generating capacity, or half the current total, by 2030 to meet carbon reduction targets it has committed to under the Paris climate deal.

In the spot electricity market, prices for day-ahead delivery fell on Tuesday on the back of a forecast sharp increase in renewable wind power generation.

German baseload power for Wednesday was down 10.29 percent at 34 euros/MWh.

The equivalent French position, fell 4.58 percent to 36.50 euros/MWh.

Electricity generation from German wind turbines is expected to surge by 8.6 GW day-on-day on Wednesday to over 12 GW, according to Thomson Reuters data. In France, available wind power capacity will rise 2.2 GW to 4.5 GW.

German solar power generation is forecast at about 4 GW on Wednesday, down 2 GW day-on-day.

French nuclear power availability rose to 70.12 percent of capacity from 68.7 percent the previous day.

In eastern Europe Czech power for Wednesday fell 9 percent to 34.50 euros/MWh. The year-ahead contract gained 2.36 percent to 34.75 euros/MWh. ($1 = 0.8393 euros)

Source: reuters
Anand Gupta Editor - EQ Int'l Media Network


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