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Nordic Market Experiencing Pressure the Nordic Electricity Price Is Approaching the German Price Due to the Low Hydrological Stock

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Nordic Market Experiencing Pressure the Nordic Electricity Price Is Approaching the German Price Due to the Low Hydrological Stock Focus week 36 2018 Nordic market experiencing pressure The Nordic electricity price is approaching the German price due to the low hydrological stock. Here and now Record-high electricity prices The substantial price climbs in recent The Nordic energy market is currently Nordic nuclear power production is times were temporarily relieved by under pressure due to the hydrological currently also operating at only 60% of a major price fall at the start of this stock being around 20-25 TWh below installed capacity due to maintenance. week. Falling coal prices, falling car- the norm. The strong oil, coal and gas Naturally, ongoing maintenance is bon emissions allowance prices, a prices are currently propping up the also being carried out at the French falling German market and prospects Nordic energy market. At the same nuclear power plants, but they have of more precipitation caused Nordic time, carbon emission allowance also experienced several unscheduled forward prices to drop significantly at prices have been climbing significantly outages in recent times. The start-up the start of August. Nevertheless, the in recent times, which also supports of these plants and other plants has market climbed rapidly again in line the relatively high electricity prices. unfortunately had to be postponed with climbing coal prices and climbing Nevertheless, the significant price following scheduled outages. This German electricity prices, but the pro- climbs in the carbon emissions has led to some uncertainties in the nounced price fall bears witness to a allowances have stopped for now market and reminds us of last summer, nervous market. (albeit possibly only temporarily) and when the French nuclear power plants the price has dropped by more than operated with reduced power for a one euro per tonne in the last week. substantial period of time. Our recommendation Forward Wk 35 (EUR/MWh) Wk 36 (EUR/MWh) Expectation (wk 37) The relatively high oil, coal and gas prices are currently propping up the ENOMOCT-18 54,43 54,61 → Nordic energy market. Added to this is the carbon emissions allowance price, ENOQ4-18 54,84 55,2 → which has increased significantly in ENOYR-19 42,55 41,85 recent times. Finally, the major wild- → card is currently the hydrological stock SYHELYR-19 4,70 4,43 ↗ and the lack of precipitation this sum- mer. We do not anticipate any major SYOSLYR-19 -0,05 -0,05 → price falls in the current market. But a weather change could rapidly alter this situation. The low hydro-balance is to blame for the high electricity prices Forecasts The hydrological stock has been significantly weakened during the year. This is Precipitation: due to the warm and dry summer. Overall, around 21 TWh less precipitation than The most recent weather fore- normal has fallen this year, while evaporation has been somewhat higher than casts have become wetter and normal. This has had a major impact on the significant price climbs experienced wetter, and we are approaching throughout summer, especially in the immediate quarter contracts. The graph a normal scenario with regard to below shows the correlation between hydro-balance developments and price precipitation volumes. Neverthe- developments for the Q4-18 contract. less, there are some uncertain- ties concerning the forecasts for next week. TWh Hydro balance vs. SYS price MWh Production and spot: 15 60 Spot prices are currently around 10 EUR 60/MWh: The average spot 5 50 price for week 35 was EUR 57.37/ 0 40 -5 MWh. There is a lot indicating -10 30 that week 36 will be just as high, -15 -20 20 if not higher. -25 10 -30 -35 0 Balance NO + SE NP System price Q4-18 The EPADs SYHELYR-19 has decreased 0,37 €/MWh during the last week. The Nordic electricity prices approaching German price levels last closing price in SYHELYR-19 is 4,43 €/MWh. We expect small When the hydro-balance is as low as it is now, the Nordic energy market is increase during this week. affected much more by imports and therefore ends up aligning with German electricity prices. The German energy market is generally priced on the basis of developments in the coal market and carbon emissions allowance market. In a scenario where there is this little water, Nordic prices therefore end up affected by developments in the coal and carbon emissions markets to a high degree. The inadequate precipitation this year has also coincided with relatively high coal and carbon emissions prices, something that has resulted in the record-high electric- ity prices experienced this summer. CEO Espen Fjeld ([email protected]) Telephone: +47 4520 7636 Communicative Analyst Karsten Sander Nielsen ([email protected]) Telephone: +45 8745 6948 Denmark Sweden Finland Norway Germany.
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