Focus week 44 2020 Substantial daily fluctuations The daily fluctuations in the Nordic energy market are currently substantial, underlining the fact that the market is in a situation of great uncertainty. The focus remains on hydrology and carbon.
Here and now Falling spot prices during wet autumn weather The forward prices in the Nordic energy The Nordic energy market remains in which we anticipate an average market are only slightly lower than one strongly focused on the extraordinarily Nordic system price of approximately week ago, but this comes on the back high water reservoir levels. Last EUR 16/MWh. With prospects of large of a week in which the market changed week, we were able to announce that precipitation volumes over the coming direction several times and experienced Norwegian water reservoir levels had weeks, hydro-power producers are substantial daily fluctuations. In spite of reached 95%, and it comes as no being forced to increase production, the low price level, there was room for surprise that the substantial pressure thereby lowering prices, in order to further price falls when the spot pric- faced by hydro-power producers prevent flooding. However, the water es, as expected, started to fall notably has started to be reflected in the reservoir levels are expected to start as a result of the extremely high water spot prices. The Nordic system price declining now, as is normal during reservoir levels. The weather forecasts climbed at the start of October, as autumn, when electricity consumption also indicate large precipitation vol- is normal for this time of year, but increases and the inflow of water to umes in the coming weeks. The Q1-21 the price level dropped again last the reservoirs decreases, as a larger and YR-21 contracts subsequently ex- week. The average Nordic system amount of precipitation falls as snow perienced further price falls. They now price for week 43 was EUR 17.41/ that settles on the mountains during cost EUR 24.60/MWh and EUR 21.05/ MWh, and there are prospects of winter instead. MWh respectively. the prices falling further this week,
Our recommendation Forward Wk 43 (EUR/MWh) Wk 44 (EUR/MWh) Expectation (w 45) There are currently few indicators of price climbs in the market. The weather ENOMNOV-20 19.20 17.65 → forecasts are wet, the hydro-balance surplus is increasing, and coronavirus ENOQ1-21 24.80 24.60 → concerns are growing. However, the ENOYR-21 21.10 21.05 market has experienced such sub- → stantial price falls lately that an up- SYHELYR-21 15.90 15.85 ↘ wards adjustment may be a possibility on the back of only fairly minor signals. SYOSLYR-21 0.65 0.60 → We believe that a sideways or slight- ly falling trend is most probable in the coming week. Increasing demand in coal market Forecasts
Coal prices in Europe have generally climbed in recent months, and the contract Precipitation: Nordic weather for coal for delivery in 2021 has been trading at around USD 60 for several weeks. forecasts remain very wet at the Climbing gas prices have made coal more attractive for electricity production af- start of week 44, and approxi- ter gas had otherwise taken over a large proportion of coal market shares during mately 60% more precipitation 2019 and the first half of 2020. The La Niña weather phenomenon is expected than normal for this time of year to cause cold weather in East Asia during the coming winter, which could result is expected in the next ten days. in increased demand. However, coal is still not in the good books as far as Euro- As such, the hydro-balance sur- pean politicians are concerned, and the upside in the market therefore appears plus continues to grow and is limited. expected to approach 20 TWh by the start of November.
Production and spot: Wind power production in the Nordic region is expected to increase notably in the coming week, with weather characterised by low pressure being expected. The average Nordic system price is then also expected to fall further from its current level.
EPADs Following several weeks of price Nordic electricity consumption expected to climb sub- climbs, there were only fairly stantially marginal fluctuations in the Finn- ish YR-21 EPAD last week. It now The Norwegian TSO, Statnett, anticipates that electricity consumption will climb costs EUR 15.95/MWh, while the by no less than 50% in the Nordic region over the next 20 years. This was the Norwegian NO1 EPAD for YR-21 statement issued by the Chief Analyst of the state-owned organisation last is now trading at a market price week. The reason for the increase is said to be the increased “electrification” of EUR 0.60/MWh. of society, including the transport sector. Rising demand means that the large electricity surplus in the Nordic region, which is currently exported to the south of the continent, will decrease. This surplus is expected to fall from 40 TWh to just 10 TWh as we approach 2040. Peter Lønbro Lehm, Director, Customers ([email protected]) Tel.: +45 8742-6720
Karsten Sander Nielsen, Communicative Analyst ([email protected]) Tel.: +45 8745-6948