Nordic Power Price Declines After Mild Weather Is ForecastTorsten Fagerholm
Nordic electricity prices fell after forecasts for milder temperatures pointed to lower electricity use and carbon allowances declined.
The March contract dropped as much as 1.3 percent to 37.25 euros ($49.81) a megawatt-hour, and traded at 37.50 euros as of 3:33 p.m. on Nasdaq OMX Group Inc.’s energy exchange in Oslo. The benchmark near-quarter contract slid 0.7 percent to 36.26 euros after earlier reaching 36.15 euros.
Low temperatures in Oslo may rise to minus 9 degrees Celsius (16 Fahrenheit) tomorrow from minus 11 today, according to CustomWeather Inc. data on Bloomberg. That compares with a 10-year average of minus 10 degrees. Temperatures may be minus 4 degrees on Feb. 22, compared with a Feb. 8 forecast for minus 21 degrees, the data showed.
EU carbon permits for December fell as much as 7.3 percent to 4.22 euros a metric ton on the ICE Futures Europe exchange in London. Emission prices can influence generating costs at coal-and gas-fed plants.
The Nordic region meets more than half of its power needs by running water through turbines. The amount of water and snow available to generate electricity in the region may be 14.6 terawatt-hours below normal for the time of year in two weeks, down from 11.9 terawatt-hours today, Markedskraft AS data on Bloomberg show.
“We estimate a quite limited hydrological deficit, which may increase by 1 terawatt-hour to 13 terawatt-hours this week, of which 5 terawatt-hours stems from water reservoirs and 8 terawatt-hours from snowpack,” Martin Lagerholm, a market analyst at Sweco Energuide AB, said today in an e-mailed research note.
German power for baseload delivery next quarter declined 0.4 percent to 37.45 euros a megawatt-hour after earlier reaching 37.25 euros, according to broker data compiled by Bloomberg.
Electricity usually flows from the cheaper area to the more expensive one, which means Nordic contracts can track the movements of their equivalents in German power derivatives.