Continental Power Edged Up on Nuclear Shortfall in September

U.K. Natural Gas Prices Ticked Higher on Generation Demand

LONDON, Oct. 13, 2015 /PRNewswire/ -- Continental European power prices rallied in September on the back of reduced nuclear generation in France, while continental gas prices continued to ebb on slack demand and mild temperatures, according to data released by Platts, a leading global provider of energy, petrochemicals, metals and agriculture information.

European power prices, according to the Platts Continental Power Index (CONTI)*, climbed 9.38% to €36.15 per megawatt hour (MWh) last month. This compared to the August average of €33.06/MWh. However, on a year-over-year basis, the index was down 2.45% from the September 2014 level of €37.07/MWh.

Platts' regional analysis of European power and gas markets in September showed the following:

• Germany: Day-ahead power prices averaged Eur32.14/MWh in September, up 2% from August, but down 7% year over year. Near-term gains were driven by higher cross-border demand from France, while longer-term declines reflected falling fuel costs and booming renewables. German wind and solar power output in September totaled 8.8 terawatt hours (TWh), up 64% from the same period a year ago.
• France: Day-ahead power averaged Eur37.54/MWh in September, up 19% from last month and up 3% from a year ago. A drop in nuclear output saw more expensive gas- and coal-fired power plants called to cover rising demand. Gas plant output rose 0.6 TWh in September to nearly 1.2 TWh, while coal plant production rose 0.4 TWh to 0.6 TWh. Nuclear generation, at 30.5 TWh, was down 1.3 TWh on a month-over-month basis from August and down 1.4 TWh versus a year ago. September demand climbed 1.6 TWh to 33 TWh in September from August.
• U.K.: Day-ahead power in September was valued at £41.73/MWh, up 3% from August and unchanged versus September 2014. Reduced wind and solar output was offset by more expensive gas-fired power generation. Tighter-than-expected capacity margins for this time of the year caused surplus plant levels to drop below 6 GW on some days.
• U.K. gas: National Balancing Point (NBP) day-ahead gas prices averaged 40.978 pence per therm (p/th) in September, up 3% on August but down nearly 15% on a year-over-year basis. Prices crept higher as the heating season made a modest debut, but the uptrend was kept in check by a mild late September. Nine liquefied natural gas (LNG) tankers arrived in the U.K. during September, matching the total seen in August. Five more were expected in the first six days of October alone.
• European gas: On the Dutch TTF, continental Europe's most liquid natural gas hub, day-ahead gas prices averaged Eur19.180/MWh in September, a 2.2% decline from August and a 7% decrease from the same period a year ago. Plentiful supply drove renewed bearish sentiment, with temperatures remaining relatively mild. Subdued demand ensured the gas system was well able to cope with intermittent supply curbs caused by upstream asset maintenance on the Norwegian continental shelf.

"Spot and front-month natural gas prices posted year-over-year declines at all European gas hubs in September, with losses gaining momentum from generous LNG supplies as cargoes berthed in Europe instead of being re-exported to Asian markets," said Platts' Team Leader of European Gas Markets Reginald Ajuonuma.

While day-ahead power prices perked up in September, forward curve contracts illustrated just how weak underlying commodity markets have become, said Andreas Franke, Platts managing editor of European power.

"German year-ahead power traded September 25 at €29.30/MWh, the lowest for a front-year power contract since October 2003," Franke said. "Front-year coal into Europe has dropped below $50/metric ton for the first time since Platts started assessing the contract in 2007."

For more information on electric power or the methodology used by Platts in its power assessments, visit the Platts website www.platts.com.

* 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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