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

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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.

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