April Sun to Curb Europe Power Price as Mild Weather Seen

Climbing solar production and a fifth month of warmer-than-average weather for April is poised to put further pressure on power prices in Europe.

Five out of six meteorologists forecast most parts of Europe to be milder-than-normal in April, according to a Bloomberg survey. The best week for solar output will be from April 6, according to MeteoGroup U.K. Ltd. in London.

“Central Europe will see more stable air with higher-than-normal amounts of sunshine,” Bradley Harvey, a meteorologist at MDA Information Systems Inc., said by e-mail on March 30. “This becomes important this time of year as the length of days increases.”

The share of electricity generated from solar panels in Europe almost tripled to 2 percent in 2013 from 2010 and is forecast to rise to 4 percent by 2020, according to data from Energy Brainpool GmbH. Power and natural gas prices across Europe slumped this winter amid the mildest weather for the period since 2007 and the second-warmest since 1981, according to MDA in Gaithersburg, Maryland.

German power for April expired yesterday at a record 29.25 euros ($40.33) a megawatt-hour, according to broker data compiled by Bloomberg. That’s the lowest month-ahead price since Bloomberg began tracking the data in 2007. The May contract rose 1.7 percent to 29.80 euros at 1:20 p.m. Berlin time, the data show.

Solar Peak

Europe’s solar panel capacity increased 14 percent in 2013 to a record 80 gigawatts, the most in the world, even as the pace of new installations slowed, according to the European Photovoltaic Industry Association. Daily peak solar output in Germany jumped by 72 percent in the first quarter to 10 gigawatts compared with the same period in 2013, European Energy Exchange AG data show. One gigawatt, or 1,000 megawatts, is enough to power 2 million European homes.

Power for delivery on July 21 fell by 18 percent when solar output in Germany, Europe’s biggest power market, reached a record 24,019 megawatts, EEX data show. Hot weather can boost demand for air conditioning and fans.

“To me it sounds like a dire situation if suppliers have come to rely on a hot summer or a cold winter,” Paolo Coghe, an analyst at Societe Generale SA, said by phone from Paris on March 28. “Even that won’t help much as air conditioning demand isn’t huge and European demand tends to peak in winter.”

The monthly German price, which dropped 7.6 percent during March, probably won’t decline to as low as 25 euros and may stabilize at 30 to 35 euros, Coghe said.

More Sunshine

The first half of April will probably be warmer than average before cooling to near normal in the second half, according to MetraWeather and MeteoGroup. Temperatures are forecast to be as much as 3 degrees Celsius (5.4 Fahrenheit) above normal in France, Italy and western Germany next week, and 1 or 2 degrees above normal in the U.K., according to Byron Drew, the lead forecaster at MetraWeather.

Average temperatures in northwest Europe including the U.K. are forecast at 13.1 degrees tomorrow compared with a seasonal norm of 9 degrees, according to WSI data using a GFS model.

Daylight hours this month increase by 1 hour 54 minutes in Berlin, and 2 hours 36 minutes in Oslo, MDA’s Harvey said.

Solar production in Germany is forecast to peak this week at 20,449 megawatts on April 6 compared with 18,404 megawatts today, according to Bloomberg’s solar model. Average sunshine hours in Britain are predicted to rise 46 percent to 148 in April from March, U.K. Met Office data show.

Solar output will be muted from April 3 to 4 amid dust from the Sahara Desert that is bound for Germany, Andreas Gassner, a meteorologist at MeteoGroup Appenzell, Switzerland, said by e-mail yesterday.

Most of Europe will be warmer than normal in May and June, except the U.K., which will be cooler than normal in May, according to WSI Corp. in Andover, Massachusetts.

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