Solar energy production increased 30% in the French market and 3.6% in the Italian between last Monday and Wednesday, compared to the average for the previous week of June 29. By contrast, on the Iberian peninsula and in Germany there were decreases of 9.2% and 1.7%, respectively.
During the first eight days of the month, solar energy production was higher than in the corresponding days last year in most European markets analysed by AleaSoft. The greatest increase was registered on the Iberian peninsula, which saw a 77% rise on early July 2019. In the Italian market, production rose 11% and in the French market, 3.8%. German proved an exception, with 2.8% less solar generation.
Between last Monday and Wednesday, wind generation increased in the Italian market and on the Iberian peninsula compared to the average seen in the previous week. In the Italian market, the increase was 30% and in the Iberian, 28%. The French market saw wind production fall 32% and in Germany, it was 7.8% lower.
During the first eight days of the month, wind production rose 94%, year-on-year, in the Italian market and 84% in the French. On the Iberian peninsula and in the German market, the increases were 36% and 11%, respectively.
Demand increased in all the European markets analysed except Italy, from last Monday to Wednesday, compared to the same days of the previous week. The drop in Italy was 0.9%, mainly due to temperatures that were 1.5 degrees Celsius cooler. The most remarkable increases were those of Portugal and Great Britain – 7.6% and 4.5%, respectively. In the Netherlands and France, the increases were 2.3% and 2.1%, respectively, while in Germany and Belgium there was an increase of 1.6% in each case.
Mainland Spain renewables production
From last Monday to Wednesday, the electricity demand in mainland Spain saw a week‑on‑week rise of 3.4%, mainly influenced by an increase in temperatures of about 0.4 degrees Celsius.
Solar production in Spain – PV and solar thermal – during the period, decreased by 9.3% compared to the average of the previous week. In the year‑on‑year analysis of production, an increase of 79% was registered during the first eight days of July.
Wind production rose 50% from last Monday to Wednesday in Spain, compared to the average of the 27th week of the year. By year‑on‑year analysis, wind production on July 1-8 rose 31%.
All nuclear power plants were operating until Thursday and nuclear production maintained a level near 167 GWh per day.
Hydroelectric reserves had 15,041 GWh stored up to Thursday, according to data from the last Hydrological Bulletin of the Ministry for the Ecological Transition and the Demographic Challenge, representing a decrease of 323 GWh from the previous update.
European electricity markets
Monday to Thursday saw price increases in most of the analysed electricity markets, compared to the same days of the week starting June 29. However, the MIBEL market of Spain and Portugal and the IPEX of Italy posted decreases of 3.8% and 7%, respectively. The highest price increase, of 12%, was registered on the EPEX SPOT market of the Netherlands. The smallest rise, of 4.2%, occurred in the Nord Pool market of the Nordic countries. In the rest of the markets, price increases were between 5.3% of the EPEX SPOT market of France and 11% of the EPEX SPOT market of Germany and Belgium.
The average for the first four days of last week was above €30/MWh in almost all the analysed markets. The exception was the Nord Pool, which had the lowest average price, of €2.29/MWh. The rest of the markets had averages between €32.46/MWh of the EPEX SPOT market of Germany and €37.35/MWh on the IPEX.
On Wednesday and Thursday, daily prices exceeded €40/MWh on the EPEX SPOT of Germany, France, Belgium and the Netherlands, and on the IPEX, while the MIBEL and the British N2EX market lamost hit the same level. The highest daily price between Monday and Thursday, of €42.42/MWh, was reached on Thursday, in Germany. However, the average of the first four days of the week in that market was the second lowest in Europe because the second lowest daily price of the period – €14.28/MWh – also occurred in Germany, last Monday. In the first four days of the week, the daily price of the Nord Pool oon Monday – €1.02/MWh – was also the lowest.
As for hourly prices, the first four days of the week brought great contrasts. The week started with negative hourly prices in Belgium, Denmark, Finland, Great Britain, Ireland, the Netherlands, Sweden, Estonia, Latvia, Lithuania and three areas of Norway. In the Baltic countries and Norway, negative prices were reached for the first time at least since 2013. However, during some hours of Wednesday and Thursday, hourly prices exceeded €50/MWh in Belgium, France, Germany, Great Britain and Italy.
Last week started with high levels of wind generation, that drove negative hourly prices in some European electricity markets on Monday. In the Nordic countries, high hydroelectric production due to snowmelt also contributed. A progressive decline in wind production over the following days favored an upward trend in prices. Another factor that led to the increase, was a rise in electricity demand.
Unlike most European electricity markets, the average price of the first four days of last week fell 3.8% on the MIBEL market of Spain and Portugal, compared to the same period of the previous week The decrease in prices was favored by an increase in wind production on the Iberian peninsula earlier in the week.
The average price from Monday to Thursday was €35.33/MWh in Spain and Portugal. Daily prices were the same in both countries with 100% hourly convergence and showed an upward trend. Last Monday, the daily price of the MIBEL was below €30/MWh at €28.39/MWh. During this period, prices rose to touch €40/MWh with a price on Thursday of €39.95/MWh, the highest in the Iberian market since the end of February.
Hourly prices above €43/MWh were reached in some hours of Thursday, the highest of which was during hour 22, of €43.82/MWh. Hourly prices at that level had not been reached since the first half of March.
From Monday to Thursday, there was a general rise in electricity futures prices for the fourth quarter in the markets analysed with respect to the settlement price of the session of July 3. The Nasdaq market of the Nordic countries registered the largest variation, of 5.4%. In terms of absolute figures, though, the EEX market of Italy showed the greatest difference, with an increase of €1.82/MWh. The EEX market of France continued to be the highest priced.
Regarding electricity futures for 2021, a price rise occurred in most markets, with the exception of the ICE and Nasdaq markets of the Nordic countries, where there were falls of 0.9% and 0.6%, respectively. In the rest of the markets, the increases were between 1.7%, on the EEX market of France and Spain and the OMIP market of Spain and Portugal, and 3.3% on the ICE market of Belgium.
Brent, fuels and CO2
Brent oil futures prices for September on the ICE market, in the first days of last week, had values above $43/bbl (€38). The maximum settlement price up to Thursday, of $43.29, was reached on Wednesday. That was 3% higher than that of Wednesday, July 1, and is the highest since the first half of March.
Despite the increase in Covid‑19 cases and the fear new confinement measures will reduce demand, OPEC+ group production cuts have favored settlement prices above $42/bbl this month. A downward effect caused by an increase in United States crude oil reserves last week, was offset by a significant decrease in gasoline reserves.
Regarding TTF gas futures on the ICE market for August, they began last week with an upward trend. As in the previous week, Monday and Tuesday brought prices above €6/MWh. On Tuesday, a settlement price of €6.12/MWh was reached. That was only 0.6% lower than that of Tuesday, June 30, when the monthly maximum settlement price of June was registered. But on Wednesday, the settlement price fell 3.1%, staying at €5.94/MWh. In the session on Thursday, values below €6/MWh were being registered.
Regarding TTF gas prices on the spot market in the first days of last week, they were above €5/MWh. Prices showed an upward trend until Wednesday, when an index price of €5.62/MWh was reached. But on Thursday, the index price fell by 2.8% to €5.47/MWh.
As for API 2 coal futures on the ICE market for August, last Monday they reached a settlement price of $52.50/t, some 2.3% higher than that of a week earlier and the highest since the end of March. But on Tuesday and Wednesday, prices fell and the settlement price of Wednesday, of $50.75/t, was already 0.3% lower than that of the first day of July.
On the other hand, CO2 emission rights futures on the EEX market for the reference contract of December, during the first days of last week, registered settlement prices above €29/t. The highest price, of €29.69/t was reached last Monday and was 12% higher than that of a week earlier and the highest since the beginning of August. Prices subsequently fell to €29.32/t on Wednesday.
Covid-19 effect on electricity markets
At AleaSoft, the webinar “Energy markets in the recovery of the economic crisis” is being organised for September 17. One of the topics to be discussed is the evolution of European energy markets during the economic recovery. As we have seen, electricity markets prices have begun to recover, but uncertainty continues with new outbreaks of Covid-19 and the possibility they will increase in the fall and winter when the school year begins, adding to a pessimistic outlook for the economy. AleaSoft’s long‑term price curves have been updated, taking into account recovery scenarios.
The recovery of market prices is positive news for the financing of renewable energy projects, another topic to be addressed in the webinar. In the series of webinars organised at AleaSoft since the coronavirus crisis began, speakers have highlighted the financing of renewables projects has remained active and the investor appetite has continued to be present. The Royal Decree‑Law 23/2020 approved by the Spanish government and auctions of solar capacity planned next month in Portugal will undoubtedly offer a new boost for the development of renewables.
To periodically monitor the evolution of energy markets, observatories have been enabled at AleaSoft which include daily information on the main variables of electricity, oil, gas and CO2 emission rights markets.