European 2014 Power Slides to Record as Emissions Permits FallRachel Morison
Power contracts for 2014 delivery in Germany and France fell to records as European emissions allowances declined.
Baseload German 2014 electricity, for supplies delivered around the clock, lost 11 percent this month, while French power declined 8.7 percent and carbon permits dropped 48 percent in the same period. Power can track emissions which affect production costs.
German power, a benchmark contract in Europe, lost 65 cents to 40.35 euros ($54.77) as of 5:30 p.m. Berlin time. That’s the lowest price on record for the next-year contract, according to broker data compiled by Bloomberg. French 2014 power slid for a second day, dropping 70 cents to 43.75 euros, broker data show.
EU carbon permits for December fell as much as 42 cents, or 11 percent, to 3.38 euros a ton on the ICE Futures Europe exchange in London.
“European power markets are structurally challenged by overcapacity, continuing renewables investments and weak demand,” Per Lekander, a Paris-based analyst at UBS AG said in an e-mailed research note. Twenty to 30 gigawatts of capacity closures are needed to fix the situation, he said.
February power in Germany lost as much as 1.7 percent to a record 41.30 euros while the equivalent French contract slid 2.3 percent to 48.85 euros a megawatt-hour, the lowest since the contract started, broker data show.
Above-average wind forecasts in Germany next week are having a knock-on effect on the February contract, Gary Hornby, an analyst at Inenco Group Ltd. in Lytham St. Annes, England, said by e-mail. Wind output may be more than 13 gigawatts every day next week and rise to as much as 20 gigawatts on Feb. 4 and 5, he said.
Wind generation in Germany reached a record 23,033 megawatts today compared with an average of 4,872 gigawatts, according to data from European Energy Exchange AG.
EnBW Energie Baden-Wuerttemberg AG halted its 721-megawatt Bexbach coal-fed plant until Feb. 4, the company said on its website.