Nordic Nuclear’s 10-Year High Damps Hydro Deficit Risk

Sweden’s highest July availability of nuclear energy for at least 10 years is set to weigh on Nordic power prices even as hydro stocks fall.

Three reactors with a capacity of more than 3,000 megawatts will resume after maintenance during the next seven days, pushing availability above 80 percent from 56 percent this morning, according to Bloomberg calculations based on data from the operators. Availability of water and snow for power generation fell below average for the first time in three months on June 16, Markedskraft AS data on Bloomberg show.

“It is a unique situation for Sweden in July,” Arne Oesterlind, a portfolio manager at Shepherd Energy AB, said June 16 by telephone from Stockholm. “The risk is on the downside right now.”

Vattenfall AB, the Nordic region’s biggest utility, typically plans maintenance during summer months, when demand and prices are lower than in winter. The restarts of the Forsmark-2 unit on Sweden’s east coast, along with Ringhals-1 and Ringhals-3 on the west coast, mean 12 of the Nordic region’s 14 reactors will be available.

The addition of nuclear generation might push the average monthly price of Nordic day-ahead power down toward the 12-year low of 13.70 euros ($18.55) a megawatt-hour reached in July 2012, said Jon Ove Heen, senior trader at Markedskraft. Prices will range from 15 euros to 27 euros a megawatt-hour next month, he estimated.

Weather Outlook

“If there is a lot of rain in July, prices could go down a bit, but otherwise we believe market price should increase,” Ove Heen said by phone from Arendal, Norway.

Day-ahead electricity averaged 26.30 euros a megawatt-hour in May on the Nord Pool Spot AS exchange in Oslo, according to data from the bourse. That’s down 31 percent from 38.10 euros for all of 2013. Nordic electricity for delivery in July fell

1.3 percent to 22.50 euros by the close today on Nasdaq OMX Group’s energy exchange in Oslo.

Current levels will leave gas- and coal-fired plants in the Nordic region producing power at a loss and discourage imports of electricity from elsewhere in Europe until at least August, when forward prices exceed 27 euros, said Jan Stroembergsson, an analyst at Swedish utility Skelleftea Kraft.

“I do not see any support for thermal production during the summer, neither in the region nor through import from the continent,” he said by phone from Skelleftea on June 16.

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