Cheap fuel, plentiful wind and weak demand combined to deflate Continental European power prices in February, according to data released by Platts.
Continental European day-ahead prices fell nearly 24% to €24.97/MWh in February compared to January. On a year-over-year basis the index was down 42.5%.
Wind generation in France and Germany was significantly higher year on year, with new records set in both countries for instantaneous generation. French wind power generation peaked at 7.87 gigawatts (GW) February 6, German wind at 33.83 GW February 8.
For natural gas, meanwhile, the European picture remained bearish through February and into March as Russian gas flows to Europe hit record levels and exports from west Europe to Ukraine fell.
Averaged over February, the UK day-ahead gas contract was down 7.7% while the day-ahead gas price at the Dutch TTF, continental Europe’s most liquid gas trading hub, fell more than 10% month over month. Year on year, UK and TTF day-ahead gas contracts were down 41% and 44% respectively.
Platts’ regional analysis of European markets showed the following. For
Germany, day-ahead prices in February averaged €22.32/MWh, down a full 24% on February and down 38% for the year. Cheap coal, high wind expansion and new market coupling rules have seen German power exports boom. In February Germany exported 2.5 TWh to surrounding markets, driving prices down everywhere.
In France, day-ahead prices fell 24% in the month to €26.14/MWh, driven sharply down by surging wind production and despite poor hydro power conditions. Year over year, wind generation in February was up 60% to 2.21 TWh, electricity demand was down 10%, and day-ahead power prices were down 47%.
In the UK average day-ahead power prices fell 8% in the month as warmer than average temperatures saw electricity demand fall to 25 TWh, down 2 TWh compared to January. Imports of continental power climbed more than 11% to 2 TWh, while more expensive gas-fired generation dipped 10% to 9 TWh. Over a year view, spot prices fell 22% in February. In the gas market National Balancing Point day-ahead gas prices fell nearly 8% in February and were down more than 41% on a yearly basis. Healthy supply fundamentals were easily able to meet demand in a colder final week in the month, which produced a late uptick in gas-fired power generation. A bearish prompt-delivery environment, combined with low oil prices, put pressure on the near curve, with month-ahead gas down 9% month over month to 29.17 pence/therm.
In the Dutch gas market, on the TTF the day-ahead gas contract was down 12.4% in February compared to January and down 44.36% versus February a year ago. Strong Russian flows of gas into Europe and reduced exports to Ukraine led to a gas storage overhang, with an additional 8 billion cubic metres of gas in northwest European storage facilities in early March compared to a year ago.
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