European power prices up 6.5% in October due to scarce solar, wind output in Germany

European power prices rose in October as solar and wind output dropped from the previous month, although prices remained below 2013 levels, according to a report from energy and commodities research firm Platts.

The Platts Continental Power (CONTI) Index rose 6.5% in October to €39.50 per megawatt hour (/MWh) compared to September and was down more than 8% compared to October 2013.

German day-ahead power prices averaged €35.42/MWh in October, the highest level since January and 2% higher than in September. On a year-on-year basis, however, German spot power prices were down 5%, according to Platts data.

"German wind and solar output in October was down 22% versus a year ago to 5.75 terawatt hours (TWh), and similarly, wind output was down 31% from year-ago levels," said Andreas Franke, Platts managing editor of European power. "A number of new coal-fired power plants and demand weakness due to the stagnating economy reduced the need for higher-priced fossil-fired generating units."

In France, day-ahead power prices averaged €41.50/MWh in October, up 14% from September but still 4% below last year. Higher nuclear production boosted supply and mild temperatures kept demand in check.

"French utility EDF hiked its national nuclear output 6% from a year ago to 32.6 TWh, while hydro production fell 16% to around 3.7 TWh," said Franke. "High levels of water supplies have been maintained after a wet summer. The mild October weather eroded peak demand, preserving hydro stocks at 70% of capacity, the highest level for late October since 2008."

Similar dynamics were at work in the natural gas market. U.K. day-ahead natural gas prices in October rose from September to an average 50.41 pence per therm (p/th), but were 23% lower than October 2013. On the Dutch gas trading platform TTF, continental Europe’s most liquid natural gas hub, day-ahead gas prices rose 2% from September but were 18% lower than October 2013.

Oil prices dropped by around 25% from the start of June through the end of October, weakening global natural gas prices in countries that buy on oil-linked contracts, according to the report.

"News of a price deal last week between Russia and Ukraine has also reduced the risk of a major interruption to European supplies this winter," said Alex Froley, Platts energy analyst.