Strong fuel rally drives up SEE power prices - EQ
Date: May 11th 2021
Author: Tanja Srnovršnik
The recent very strong fuel rally and EU carbon prices moving towards EUR 53/t have pushed up spot power prices in south east Europe (SEE), shows Montel’s Energy Quantified (EQ) data.Weekly spot power prices are expected to increase from an average of between EUR 50.50/MWh in Bulgaria and EUR 53.55/MWh in Slovenia last week (18) to between EUR 57.33/MWh in Bulgaria and EUR 61.63/MWh in Romania this week (19).
“The average Hungarian and Romanian spot power prices for week 19 are forecast to be about EUR 5/MWh higher than forecast a week ago, as German wind output levels have decreased,” said Eylert Ellefsen, senior analyst and hydrology expert at EQ, on Tuesday.
The available nuclear capacity in Hungary and Romania has also been reduced, added Ellefsen.
Meanwhile, the day-ahead baseload power prices for delivery on 12 May amounted to EUR 69.49/MWh on the Hungarian Hupx power exchange, and EUR 68.49/MWh on the Romanian Opcom power exchange. The prices reached EUR 64.68/MWh on the Bulgarian Ibex power exchange, EUR 67.68/MWh on the Serbian Seepex power exchange, and EUR 68.75/MWh on the Slovenian BSP power exchange.
This growth in prices can also be attributed to very bullish EU emission allowances (EUAs) and gas and coal markets, said Ellefsen.
The Dec 21 EUA reached a new record of EUR 52.97/t on Tuesday, while the June front-month gas on the TTF market hit a four-month high of EUR 25.39/MWh earlier on Tuesday.
For the week ahead (20), EQ expects “moderate fundamental changes” in the SEE markets, said Ellefsen.
EQ does, however, foresee an increase in hydro power output in Romania, as hydro reservoirs are increasing due to snowmelt.
“Both the Serbian and Romania hydro reservoirs are currently higher than their seasonal averages,” said Ellefsen, adding that the temperatures will be close to normal next week.
EQ’s data shows that the SEE power contracts for June have followed the fuel prices. The short-run marginal costs (SRMC) for coal and gas-fired power plants have increased by EUR 4-5/MWh since the end of April, said Ellefsen.
“The Hungarian and Romanian power contracts for June have increased by about EUR 3/MWh in the same period,” he said.
“Compared to the spot price forecasts for the next few weeks, a downside can be seen on the June contracts, but the situation is very uncertain and risky after the very strong fuel rally,” he added.