September 17, 2012 / 10:08 AM / 5 years ago

NORDIC POWER-Spot prices to rise on falling wind capacity

* Tuesday's spot power price seen at 26 euros/MWh
    * Wind power generation seen back at or below norm
    * Coal-fired power generation gets boost from stronger euro

    LONDON, Sept 17 (Reuters) - Nordic spot electricity prices
are expected to rise on Tuesday as lower wind power capacity and
higher demand pushes up the market, analysts said on Monday.
    The Nordic average day-ahead power price for
Saturday delivery is expected to rise to 26 euros a
megawatt-hour (MWh) from 20.6 euros on Friday and a system price
of 25 euros a MWh that was settled for Monday.
    "Lower wind power and nuclear output and higher consumption
are bullish signals for tomorrow," analysts at Thomson Reuters
Point Carbon said.
    Meteorologists said wind power generation was expected to
drop from an available capacity of almost 1,900 megawatt in
Denmark on Monday back to the seasonal norm of just below 1,000
MW. Swedish output was seen dropping from 1,100 MW on Monday to
around 600 MW on Tuesday, against a seasonal norm of 850 MW.
    Also, Sweden's 866 MW Ringhals-2 nuclear reactor started 
six-week maintenance on Saturday. That work is scheduled to last
longer than initially planned due to extra inspections of its
pressure vessel, after suspected cracks in the pressure vessel
halted Belgium's 1,006 megawatt Doel 3 reactor near Antwerp last
month. 
    Both pressure vessels were manufactured by now defunct Dutch
company Rotterdamsche Droogdok Maatschappij.
    
    EURO BOOSTS COAL PROFITS
    Further out on the price curve, sentiment remained bearish,
with prices for baseload delivery next year approaching 37 euros
per MWh.
    Trading at 37.20 MWh on Monday morning, the contract has
shed more than 6 percent in value since late August.
    The drop is in line with benchmark German forward power
prices, which continued a trend of the past three years of
falling into a downturn in late summer following price rises
earlier in the season. 
    In other related markets coal futures were also down, with
API2 2013 contracts back below $100 per tonne at $99.75 a tonne.
    Healthy export levels from traditional exporters such as
Colombia or South Africa as well as rising supplies from the
United States, where a shale gas exploration boom has pushed
coal out of the domestic market and into Europe, have led to an
oversupplied coal market and helped pull prices down.
    API2 2013 coal contracts have been in a downward trend since
summer 2011 and have dropped more than a quarter since then.
    Profitability of coal-fired power plants has also been
boosted by a sharp rise in the euro against the dollar in the
past 10 days.
    Europe's common currency has risen over 4 percent since the
German supreme court allowed the government to ratify a policy
that will allow the European Central Bank to buy up government
bonds of troubled euro zone members.
    A higher euro increases the purchasing power of European
utilities that buy coal in the dollar-traded coal market and use
it to produce electricity domestically in euros.
    "Coal has already been the fuel of choice for utilities that
can switch between coal and gas, because there is a coal
oversupply, while gas is a bit tight," one utility trader said.
    "The rising euro will only strengthen that trend," he added.

 (Reporting by Henning Gloystein; Editing by Hugh Lawson)

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