European 2015 Power Prices Fall to a Record on Fuel Costs

European power prices for 2015 dropped to a record as fuel costs fell, cutting production expenses at plants burning coal and gas amid mild weather.

Europe’s benchmark contract dropped as much as 0.7 percent and Czech power for 2015 dropped to its lowest level since the contract’s start in June 2012, broker data compiled by Bloomberg show. German gas for next year fell 0.2 percent to 24.65 a megawatt-hour, declining for a sixth day to the lowest since 2011, according to broker data from NetConnect Germany. European coal for delivery in 2015 retreated 0.5 percent to $80.90 a ton, extending this year’s decline to 6.6 percent, broker data showed.

Wholesale power prices in Europe’s biggest economy have plunged 34 percent since 2010 amid record output from renewables, while electricity demand last year slumped to the weakest since 2009, according to energy researcher AG Energiebilanzen e.V. Trading in German power last month fell 36 percent from a year earlier to 454 terawatt-hours, according to Trayport’s Euro Commodities Market Dynamics Analysis report.

“The market has been really illiquid in the last days, while from the beginning of the year all the important energy commodities are heading downwards and there was no winter,” Juraj Broncek, the head of central and eastern Europe energy at 42 Financial Services, a Prague-based electricity and gas broker, said by e-mail. Prices may drop even lower this week, he said.

French Electricity

German power for delivery in 2015 fell to 34.95 euros ($48.19) a megawatt-hour, the lowest since the contract’s start in November 2010, as of 4:47 p.m. in Berlin, according to broker data compiled by Bloomberg.

Czech power for 2015 dropped as much as 0.3 percent to 34.05 euros a megawatt-hour, broker data show. French electricity for next year declined to 42.40 euros a megawatt-hour, the lowest in a month.

Next-day electricity in Germany dropped 7.1 percent to 35.85 euros a megawatt-hour in auction on EEX exchange, amid forecast higher output from renewable sources. Nordic electricity for tomorrow settled little changed at 27.33 euros a megawatt-hour on the Nord Pool Spot exchange in Oslo.

Solar output in Germany is set to peak at 22,079 megawatts tomorrow, up from 20,658 megawatts today, while wind production is forecast to rise to 6,268 megawatts tomorrow from today’s high of 4,296 megawatts, according to Bloomberg’s solar and wind model.

Average aggregated temperatures in northwest Europe are forecast to be 10.5 degrees Celsius next week, compared with a seasonal norm of 9.1 degrees, according to WSI data using the GFS model. Germany is poised to be 1 degree warmer than normal, the data show.

To contact the reporter on this story: Marek Strzelecki in Warsaw at mstrzelecki1@bloomberg.net

To contact the editors responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net John Deane, Rob Verdonck

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