Shivering temperatures boosted Europe’s electricity market prices

Solar PV, solar thermoelectric and wind energy production

The main European electricity markets registered a decrease in solar energy production in the week of Nov. 27 compared to the seven days prior. The German market registered the largest decline of 59%, followed by 45% in Spain, 44% in Portugal, 27% in France and 19% in Italy.

According to AleaSoft Energy Forecasting’s solar energy production forecasts, PV production will recover in Spain in the first week of December, while it will continue to decline in Italy and Germany.

As for wind energy production, the Italian, Spanish and Portuguese markets registered an increase in production during the week of Nov. 27 compared to the week of Nov. 20. Italy increased by 32%, Spain increased by 7.7% and Portugal increased by 3.0%. In the German market, wind energy production decreased by 54%, while in decreased by 19% in France.

AleaSoft Energy Forecasting’s wind energy production forecasts indicate an increase in wind energy production in most of the analyzed markets – except in Italy – for the week of Dec. 4.

Electricity demand

Electricity demand increased in all major European electricity markets in the last week of November compared to the previous seven days. Great Britain registered a 15% increase while France clocked in 14%. Portugal saw the smallest increase of 2.3%. In all other markets analyzed at AleaSoft Energy Forecasting, demand variations ranged from 2.6% in Italy to 8.5% in the Netherlands.

Falling average temperatures led to increasing demand. In the markets of Germany, France, Great Britain, Belgium and the Netherlands, average temperatures fell by more than 3 C during the week of Nov. 27 compared to the previous week. The Dutch market registered the largest decrease of 5.9 C. Markets located towards the south of Europe saw smaller variations. Italy's average temperature decreased by 0.5 °C, while Spain's temperature increased by 0.1 C and Portugal's increased by 0.4 C.

According to AleaSoft Energy Forecasting’s demand forecasts, demand for electricity will continue to grow in Germany, Great Britain and the Netherlands in the first week of December. Spain celebrates the Spanish Constitution Day on Dec. 6 and Spain, Portugal and Italy celebrate the Immaculate Conception on Dec. 8. These holidays will favor a drop in demand in these markets, but demand will recover in Portugal after the Dec. 1 holiday and is expected to exceed numbers from the week of Nov. 27. Demand will fall in France and Belgium.

European electricity markets

Daily prices in most main European electricity markets increased during the week of Nov. 27. Thursday, Nov. 30 saw the highest prices. Although daily prices followed a downward trend in the Iberian market since the beginning of the week, on average they were higher than those of the previous week. As a result, the weekly averages of all electricity markets analyzed at AleaSoft Energy Forecasting were higher than the previous week. Germany's EPEX SPOT market saw the largest price rise of 37% while Italy's IPEX market had the smallest increase of 1.8%. In the rest of the analyzed markets, prices increased between 26% in the N2EX market of the United Kingdom and 35% in the MIBEL market of Spain and Portugal.

In the last week of November, weekly averages were above €130/MWh in most of the analyzed European electricity markets. The exceptions were Portugal and Spain's MIBEL market, clocking in €93.94/MWh and €94.04/MWh, respectively, and the Nordic country's Nord Pool market registering €102.27/MWh. The British market saw the highest average of €139.03/MWh. Prices ranged from €131.82/MWh in the German market to €134.04/MWh in the Italian market.

On Thursday, Nov. 30, from 17:00 to 18:00, the German, Belgian, French and Dutch markets registered hourly prices above €260/MWh. The highest prices were those of Germany and the Netherlands, €261.00/MWh in both cases. The French market price, €260.95/MWh, was the highest since the end of August in that market. On Monday, Dec. 4, from 8:00 to 9:00, the Nordic market registered a price of €199.93/MWh, the highest since December 2022.

During the week of November 27, the general increase in electricity demand and the fall in solar energy production had an upward influence on European market prices. In addition, wind energy production fell in some markets, such as Germany and France.

AleaSoft Energy Forecasting’s price forecasts indicate that in the first week of December, prices in the European electricity markets might decrease. The increase in wind energy production in most of the analyzed markets could contribute to this behavior.

Brent, fuels and CO₂

Brent oil futures for the Front‑Month in the ICE market started the last week of November with a slight price decline from the previous week. However, prices rose again on Tuesday and Wednesday. These futures registered their weekly maximum settlement price, $83.10/bbl, on Wednesday, Nov. 29. On the remaining days of the last week of November, prices declined to reach the weekly minimum settlement price, $78.88/bbl, on Friday, Dec. 1.

Expectations about the OPEC+ meeting on Thursday, Nov. 30, exerted an upward influence on prices in the first half of the week. However, the production cuts announced by OPEC+ for the first quarter of 2024, which will be voluntary, did not offset the downward influence caused by concerns about the evolution of the global economy in the last sessions of the week.

As for settlement prices of TTF gas futures in the ICE market for the Front‑Month, these were below €44/MWh in the last week of November. On Monday, Nov. 27, TTF gas futures reached the weekly maximum settlement price of €43.98/MWh. This price was already 5.7% lower than in the last session of the previous week. Prices declined on Tuesday and Wednesday. These futures registered their weekly minimum settlement price, €40.36/MWh, on Wednesday, Nov. 29. According to data analyzed at AleaSoft Energy Forecasting, this price was the lowest since Oct. 6. In the last sessions of the week, prices recovered. On Friday, Dec. 1, the settlement price was €43.50/MWh.

During the last week of November, high European reserves and abundant supply allowed TTF gas futures prices to be below €44/MWh, despite the increase in demand due to the cold snap on the continent. On the other hand, forecasts of less cold temperatures might exert a downward influence on prices in the coming days.

As for CO₂ emission rights futures in the EEX market for the reference contract of Dec. 2023, they reached their weekly maximum settlement price, €73.64/t, on Monday, Nov. 27. This price was 3.9% lower than in the last session of the previous week. During the week, settlement prices declined until Thursday, Nov. 30. On that day, these futures registered their weekly minimum settlement price, €70.81/t. This price was the lowest since October 2022 for the reference contract of December of that year. On Friday, the settlement price increased to €72.49/t, under the influence of the increase in demand due to low temperatures.