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Euro’s electricity prices recovered by falling wind generation

Solar photovoltaic, solar thermoelectric and wind energy production

In the week of Nov. 6 changes in solar energy production in the main European electricity markets did not follow a homogeneous trend compared to the previous week. Solar energy production increased by 37% in Spain, 19% in France and 12% in Portugal. The Italian and German markets did the opposite and solar energy production fell by 7.7% and 1.7%, respectively.

It is expected solar energy production will increase in Spain and Italy for the week of Nov. 13, according to AleaSoft Energy Forecasting’s solar energy production forecasts.

Wind energy production in the main European electricity markets decreased week‑on‑week during the week of Nov. 6. This was after reaching very high levels at the end of October and the beginning of November. The Italian market registered the largest drop of 35% followed by the Portuguese market with 34%. The German market registered the smallest decline of 9.9% but the country’s wind energy generated 897 GWh on Nov. 6 – the highest volume since mid‑March.

For the week of Nov. 13, AleaSoft Energy Forecasting’s wind energy production forecasts indicate that wind energy production will continue to decline in most of the analyzed markets except for Italy.

Electricity demand

In the week of Nov. 6 electricity demand increased in the main European electricity markets compared to the previous week. This was partly due to demand recovering after the previous week’s falls related to the celebration of All Saints’ Day in most of Europe. Increases ranged from 3.6% in the Dutch market to 12% in the French market.

During the same period, average temperatures decreased in all analyzed markets compared to the previous week. The decreases ranged from 3.1 C in Italy to 1.0 C in Portugal.

According to AleaSoft Energy Forecasting’s demand forecasts, in the week of Nov. 13, electricity demand will increase in most of the analyzed markets. Only the French, German and Spanish markets will register lower demand.

European electricity markets

In the week of Nov. 6 prices in the main European electricity markets showed an upward trend compared to the previous week. The MIBEL market of Spain and Portugal reached the highest price rises, 148% and 161%, respectively. In contrast, the N2EX market of the United Kingdom registered the smallest increase of 8.1%. Elsewhere, prices rose between 27% in the IPEX market of Italy and 69% in the Nord Pool market of the Nordic countries.

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In the second week of November, weekly averages were below €100/MWh in most of the European electricity markets analyzed at AleaSoft Energy Forecasting. The exceptions were the British and Italian markets, where the averages were €107.11/MWh and €121.54/MWh, respectively. For the third consecutive week, the Portuguese and Spanish markets registered the lowest average prices, €56.90/MWh and €57.11/MWh, respectively. In the rest of the analyzed markets, prices ranged from €72.56/MWh in the Nordic market to €95.54/MWh in the EPEX SPOT market of the Netherlands.

Despite the rise in the weekly average in the second week of November, the MIBEL market registered 36 hours with prices below €10/MWh on Nov. 6, 11 and 12. From 18:00 to 19:00 on Tuesday, Nov. 7, the Nordic market reached the highest price since the beginning of April with €149.86/MWh.

During the week of Nov. 6, the increase in demand and the fall in wind energy production in Europe caused electricity market prices to spike.

AleaSoft Energy Forecasting’s price forecasts indicate that in the third week of November prices in most European electricity markets might continue to rise. Declining wind energy production will contribute to this behavior.

Brent, fuels and CO2

On Monday, Nov. 6, Brent oil futures for the Front‑Month in the ICE market registered their weekly maximum settlement price, $85.18/bbl. This price was already 2.6% lower than the previous Monday. Prices declined on Tuesday and Wednesday to reach the weekly minimum settlement price, $79.54/bbl, on Wednesday, Nov. 8. This price was 6.0% lower than the previous Wednesday and the lowest since July. In the last sessions of the week, prices increased again. The settlement price on Friday, Nov. 10 was $81.43/bbl. This was 4.1% lower than the previous Friday.

Concerns about demand evolution in the United States and China exerted their downward influence on Brent oil futures prices in the second week of November. In addition, fears of supply problems related to instability in the Middle East diminished, reducing their upward influence on prices. But, Iraq’s support for OPEC+ production cuts pushed prices higher at the end of the second week of November.

According to data analyzed at AleaSoft Energy Forecasting, settlement prices of TTF gas futures in the ICE market for the Front‑Month were below €50/MWh in the second week of November. On Monday, Nov. 6, they registered the weekly minimum settlement price, €44.83/MWh. This price was 11% lower than the previous Monday. On the other hand, on Thursday, Nov. 9, they reached the weekly maximum settlement price, €48.13 /MWh. This price was still 0.9% lower than the previous Thursday.

During the second week of Nov. high levels of European reserves and abundant supplies of liquefied natural gas kept prices below €50/MWh. In addition, Israel ordered the reopening of the Tamar field and supplies to Egypt from this country increased. On the other hand, Bulgaria’s new tax on Russian gas might exert its influence on price evolution in the coming days.

As for the settlement prices of CO2 emission rights futures in the EEX market for the reference contract of December 2023, at the beginning of the second week of November they continued the declines that began at the end of the previous week. As a result, the settlement price on Tuesday, Nov. 7, €75.25/t, was the weekly minimum. This price was 4.8% lower than the one on the same day of the previous week. It was also the lowest since the settlement prices of some November 2022 sessions for the reference contract of December 2022. But, in the last three sessions of the week, prices increased. On Friday, Nov. 10, these futures reached their weekly maximum settlement price, €78.70/t. This price was 1.4% higher than the one on the same day of the previous week.

AleaSoft Energy Forecasting’s analysis is based on the potential for energy markets in Europe and the financing and valuation of renewable energy projects.

The views and opinions expressed in this article are the author’s own, and do not necessarily reflect those held by pv magazine.

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Source: pv magazine