Nordic Next-Year Power Climbs to Three-Week High on Carbon Price

Nordic electricity for next year rose to a three-week high, tracking gains in carbon.

Power for 2014 climbed 1.8 percent to a three-week high of 37.35 euros ($50) a megawatt-hour as of 3:10 p.m. on Nasdaq OMX Group Inc.’s energy exchange in Oslo. EU carbon permits for December jumped as much as 9.5 percent to 4.60 euros a metric ton on the ICE Futures Europe exchange in London. Emission prices can influence generating costs at coal and natural gas-fed plants.

“Together with firmer coal prices, carbon underpins German power and offers support to the Nordic 2014 contract,” Erik Svensson, head of financial trading at Swedish energy trading company Modity Energy Trading AB, said today by phone from Lund.

Coal for delivery next year in northwest Europe rose as much as 1.5 percent to $101.10 a ton, its biggest jump since Jan. 2, according to broker data compiled by Bloomberg. Workers at Cerrejon, Colombia’s biggest coal mine, went on strike yesterday.

Drier weather forecasts indicated curbed power supply, which gave support to near-term contracts.

The benchmark near-quarter power contract gained as much as 2 percent to 36.80 euros, the most since Jan. 16, and later traded at 36.60 euros. That’s the highest since Jan. 23. March power surged as much as 2 percent to 38.25 euros, and later traded at 37.95 euros.

Water Reserves

The Nordic region gets half of its power by running water though turbines. The amount of water and snow available to generate electricity in the region may be 14.7 terawatt-hours below normal for the time of year in two weeks, Markedskraft AS data on Bloomberg show. That’s 64 percent more than today’s deficit of 9 terawatt-hours.

“Prices are underpinned by forecasts for very dry weather for the next 14 days, which acts as a rapid drain on water reserves,” Svensson said. “The contract could gain a further euro or euro and a half, but not more, as long as the spot price fails to rise.”

Hydropower reserves will last throughout the winter, until the spring thaw and melting period starts, Toni Sjoeblom, portfolio manager at Finland’s Energiakolmio Oy said in an e-mailed statement.