German Electricity Trades Near Seven-Month High as Coal GainsRachel Morison
German power for delivery next month declined after a three-week rally in fuel prices boosted costs for generators and pushed the contract to the highest level since January.
Electricity for next-month delivery fell 1.3 percent today, paring its gain since the close on Aug. 23 to 11.1 percent. The equivalent coal contract has risen 5 percent in the period and European emissions permits climbed 21 percent, according to broker and exchange data compiled by Bloomberg.
Germany boosted its share of power supply from renewable energy sources such as wind and solar to 23 percent last year from 17 percent in 2010, increasing its reliance on less predictable forms of generation and boosting prices on windless, overcast days. Renewable energy gets priority access to Germany’s grid and solar output is highest in summer months, when sunshine hours are greater and electricity demand for heating is lower.
“If there is a lack of wind in October then prices could really rise, especially if it is cold,” Daniel Juul Jensen, a senior trader at Danske Commodities A/S, said yesterday by phone from Aarhus, Denmark. “People are a bit afraid of no wind and no solar next month.”
German next-month power yesterday rose to its highest since Jan 29, according to broker data compiled by Bloomberg. It fell 1.3 percent today to close at 41.55 euros ($56) a megawatt-hour. Month-ahead coal fell 1.6 percent to $80.30 a metric ton after yesterday closing at the highest level since May 16, broker data show. Carbon permits fell 2.9 percent to 5.37 euros a ton on the ICE Futures Europe exchange in London.
The clean-dark spread, a measure of the profitability of coal-fired plants next month that takes into account power prices and fuel costs, widened 27 percent since Aug. 26 to 12.60 euros a megawatt-hour today, according to data compiled by Bloomberg.
Available generating capacity is forecast to rise to 63,345 megawatts on Oct. 18 compared with 55,571 megawatts today, according to data from European Energy Exchange AG. Nuclear, coal and gas-fed power plants typically undergo maintenance in the spring and summer, when warmer weather cuts power consumption.
“Plant availability should be better but we know for sure that solar won’t have that much impact compared to this month or August,” Juul Jensen said. “If there are only a few nuclear or lignite outages, then the price could rise even higher.”
Solar power in Germany reached a record 24,019 megawatts on July 21, according to EEX data. That compares with a peak of 13,770 megawatts forecast today, according to Bloomberg’s solar model. Wind output climbed to a record 23,331 megawatts on Jan. 31, the EEX data show.
The average temperature in Germany next week will be 12.8 degrees Celsius (55 Fahrenheit), compared with the seasonal norm of 13 degrees Celsius, according to according to the GFS model supplied by MetraWeather on Bloomberg.