European Power Prices up 35% as Bear Run Broke in September

LONDON, Oct. 9, 2014 /PRNewswire/ -- Reduced hydro, nuclear and wind power output combined in September to reverse an eight-month fall in continental European day-ahead power prices, according to data and analysis just released by Platts, a leading global energy and commodities information provider.

Platts' Continental Power (CONTI) Index* rose 34.6% in September to €37.07 per megawatt hour (/MWh) compared to August's low of €27.54/MWh. The recovery was driven in part by a 66% hike in French day-ahead prices on the back of a dip in hydro power output, which offset a rise in nuclear production.

"Last month French generator EDF hiked its nuclear output by 3% on a monthly basis and 7% on an annual basis to 31.8 terawatt hours (TWh). In contrast, hydroelectric output fell 28% for the month and 4% versus a year ago to 3.6 TWh," said Andreas Franke, Platts managing editor, European power.

"Belgium was also a force in upward price pressure in the region after unplanned outages at three nuclear reactors operated by Electrabel removed 3 gigawatts (GW) of capacity that would normally account for around 25% of national output," he said.

Belgian operator Elia has warned that cold weather could test Belgium's supply balance from as early as November. The government has implemented an 850-MW strategic reserve mechanism. If required, this would be followed by up to 3 GW of controlled power cuts.

"This could add a premium to surrounding power markets, such as the Netherlands, as demand increases with colder weather, and the Belgian grid lifts its reliance on imports," Franke said.

Natural Gas Prices Climb 19%

Meanwhile, both U.K.** and Dutch TTF day-ahead natural gas prices rose 19% on average last month as the market moved towards the new gas year, starting October 1, and a dispute over gas prices rumbled on between Russia and Ukraine.

"Despite the European Commission's efforts to bring the two sides together, there is still no resolution to this year's long-running Russia/Ukraine gas bill dispute," said Alex Froley, Platts energy analyst. "The continued risk is that this conflict could lead to interruptions of Russian flows through Ukraine this winter, which also may have helped push prices up in September."

While gas prices in the U.K. and on continental Europe rose month over month, they remained below levels seen a year ago. The U.K. day-ahead average natural gas price for September 2014 was down 26% from last year, while TTF day-ahead gas was down 21%.

"The biggest change in the U.K. market was a reduction in LNG send-out from terminals, which fell to 25 million cu m/day in September from average rates over 40 million cu m/day throughout May to August, possibly due to maintenance in Qatar," Froley added. "U.K. gas demand was up slightly on the month, although this was limited by mild weather. Demand for gas from UK power plants was steady in September from August, though up 31% from September last year, with gas competing better against coal."

Gas forward curves displayed a similar trend. The U.K. forward contract for winter delivery of gas expired end-September valued at 57.10 pence per therm (p/th) — almost 20% below its 70.70 p/th price at the beginning of 2014.

"Crushed by a mild winter and record high storage levels this year, the U.K. gas forward contract for winter 2014/15 delivery period between October 1 and March 31 closed 17% below what it averaged throughout its Platts-assessed trading life of 68.697 p/th," said Nathan Richardson, associate editor, U.K. natural gas. "It was once valued as high as 77.50 p/th in the first few days of Platts assessments of the Winter 14 contract in September 2011."

NOTE: All figures are monthly averages of daily day-ahead contract prices as assessed   by Platts.

*Platts Continental Power Index (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.

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

About Platts: Founded in 1909, Platts is a leading global provider of energy, petrochemicals, metals and agriculture information and a premier source of benchmark prices for the physical and futures markets.  Platts' news, pricing, analytics, commentary and conferences help customers make better-informed trading and business decisions and help the markets operate with greater transparency and efficiency.  Customers in more than 150 countries benefit from Platts' coverage of the biofuels, carbon emissions, coal, electricity, oil, natural gas, metals, nuclear power, petrochemical, shipping and sugar markets.  A division of McGraw Hill Financial (NYSE: MHFI), Platts is based in London with more than 1000 employees in more than 15 offices worldwide. Additional information is available at http://www.platts.com.

About McGraw Hill Financial: McGraw Hill Financial is a leading financial intelligence company providing the global capital and commodity markets with independent benchmarks, credit ratings, portfolio and enterprise risk solutions, and analytics. The Company's iconic brands include Standard & Poor's Ratings Services, S&P Capital IQ, S&P Dow Jones Indices, Platts, CRISIL, J.D. Power and McGraw Hill Construction. The Company has approximately 18,000 employees in 30 countries. Additional information is available at www.mhfi.com.

SOURCE Platts

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