Europe Power Costs Hit Longest Falling Streak Since Early 2020
(Bloomberg) -- Europe’s longer-term power prices were pulled lower for the seventh session as milder weather and improved gas supplies brought down nearer-term prices.
It’s getting cheaper to power homes and factories across the region as more liquefied natural gas arrives in Europe to fuel power stations, and windy weather bolsters renewable output. Power costs still remain historically high, with Germany’s year-ahead price, a benchmark for the continent, more than double its level this time last year.
That contract continued its descent, dropping 3.8% to 112 euros a megawatt-hour on European Energy Exchange AG by 12:05 p.m. London time. That’s a 7-day falling streak, the longest since February 2020, and was followed by prices across the continent.
It’s becoming less profitable to burn coal for power generation with the so-called clean-dark spread for February narrowing to 67.37 euros a megawatt-hour. Clean-spark spreads for next month fell to 6.25 euros. That’s down from 180 euros and 118 euros respectively at the end of December.
“The German and French month-ahead contracts continue to trend lower, mostly with gas,” said Sabrina Kernbichler, a power analyst at S&P Global Platts. “Forward fuel and carbon prices are also moving lower which is, in turn, weighing on power contracts.”
Nuclear availability in France remains at historically low levels for March and April, which could threaten an upside risk to French prices in those months if there’s a repeat of the “long heating season” of 2021, according to Kernbichler.
France, which faces relatively colder weather next week compared to the rest of Europe, is highly dependent on electric heating across the country, so citizens and businesses can be particularly affected by power prices.
Available nuclear capacity was 79% early Thursday with 11 units offline, according to Bloomberg calculations using data from grid operator RTE. Electricite de France SA delayed the restart of four plants.
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