Platts: European Power Prices Fell 13% as Wind Records Tumbled in December

Mild Weather Stripped Heating Demand as Natural Gas Prices Declined Again

LONDON, Jan. 14, 2016 /PRNewswire/ -- Continental European power prices tumbled again in December as exceptional wind power output combined with mild temperatures and falling demand, according to data released by Platts, a leading global provider of energy, petrochemicals, metals and agriculture information.

European power prices, according to the Platts Continental Power Index (CONTI)*, fell 13.29% to €33.08 per megawatt hour (MWh) in December compared to November, itself down 9.4% on October levels. On a year-over-year basis the index was down 14.5% in December.

Mild weather twinned with falling oil prices saw European gas prices fall further as well. The U.K. day-ahead natural gas price fell 3.9%, while Dutch TTF day-ahead gas fell nearly 8% on a month-over-month basis in December.

Platts' regional analysis of European power and natural gas markets showed the following:

• Germany: day-ahead prices in December averaged €28.32/MWh, down 12% month over month as German wind output chalked up a new monthly record at 11.5 terawatt hours (TWh), up 30% from December 2014. Wind was Germany's largest single source of electricity through December, forcing lignite-fired power plants into second place with 11.1 TWh. Total 2015 wind output is estimated at 86 TWh, up 50% from 2014.
• France: day-ahead prices fell 17% month over month to €35.05/MWh in December, and were down 14% year over year. Strong output gains in wind and solid nuclear availability served to balance sub-par hydro performance towards the end of the year, with key generator EDF on track to meet its 410 TWh nuclear output target for the year.
• U.K. power: average day-ahead prices in December were 8% down month over month and 21% down year over year as an unusually mild, wet and windy winter endured. Wind supplied 17% of U.K. electricity demand for the month, surpassing the previous record of 14% set in January, 2015. For the year, 11% of the U.K.'s electricity was generated by wind, up from 9.5% in 2014.
• U.K. gas: National Balancing Point (NBP) day-ahead gas prices fell 3.88% month over month to 34.18 pence/therm in December, and were down a hefty 36.50% on December 2014 levels of 53.83 pence/therm. Mild temperatures reduced household heating demand by nearly 25% year over year, in turn reducing the need for storage withdrawals to balance the system.
• Dutch gas: on the TTF, continental Europe's most liquid gas trading hub, mild weather continued to drive losses, with the day-ahead gas contract falling to €13.95/MWh over the Christmas period -- its lowest level since April 2010. Domestic gas demand fell 22% year over year to 3.1 Bcm, with greatly reduced domestic heating needs triggering a 28% fall in local distribution zone consumption.

"German power prices continued their downward trend in 2015, but a 4% decline was the smallest annual drop in the post-Fukushima-era as record power exports, plant closures and higher carbon prices helped to stem losses caused by the renewables boom," said Platts Managing Editor of European Power Andreas Franke.

A 4% year-on-year decline in spot price for full year 2015 to €31.65/MWh compared with a 12% decline in 2014, 13% in 2013 and 17% in 2012, from an average €51.69/MWh back in 2011.

On the curve, meanwhile, German year-ahead baseload power for 2016 delivery averaged just below €31/MWh in 2015 compared with €35.08/MWh in 2014, a drop of 12% following a 10% decline in 2014.

"Front-year coal into Europe dropped some 33% in price over the course of 2015, falling below $44/mt for the first time since Platts started assessing the contract in 2007," Franke said.

Front-year TTF gas, the benchmark contract for continental gas, shed 36% from its 2015 high in February and its year-low of €14.75/MWh recorded December 24. On average the daily closing price for front-year TTF gas was down 17% in 2015.

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

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

* The Platts 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.

Media Contacts:
Global, Americas, Asia: Kathleen Tanzy, + 1 917 331 4607, kathleen.tanzy@platts.com

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