Carbon weighs down on prices for the front year but spot prices are up because of less wind
German and French spot electricity prices rose Thursday morning, amid predictions of a?lower wind power generation. Meanwhile, a steep?drop in the European Carbon Market weighed on long-term prices.
The French 'day-ahead' baseload power contract rose by 39.70 euros, to?54.25 euros per megawatt (MWh), at 1007 GMT. Meanwhile, the German contract had risen 3.50 euros, to 107 euros/MWh.
Riccardo Paraviero, LSEG analyst, said: "The decline in power supplies is a positive factor for Germany's future."
He added that wind power production is expected to drop from a peak of 35 gigawatts at the beginning of the day down to 10?GW by the end of the day. This will increase the demand for more expensive, alternative generation.
The French wind energy generation will also fall from 17.8 GW to 7?GW by Friday.
This will be partly offset by an increase of 1.4 GW in French nuclear power?availability.
LSEG data shows that the German baseload year-ahead contract is down 2.15 Euros at 79.85 euro/MWh. The equivalent French price has yet to trade, after dropping 1.83% on Wednesday to 48.30 euro/MWh.
Analysts at Mind Energy said in a recent note that the development of the carbon and gas markets is driving forward contracts.
They added, "We expect more price drops today due to the sharp declines on the carbon markets." The European benchmark carbon contract fell by 5.71 euro to 72.75 per metric ton. This is the lowest level since August last year. Analysts attribute the drop to remarks from German Chancellor Friedrich Merz, who suggested that the EU should be "open" to revising or delaying tightening measures within the bloc's emissions trading system (ETS).
Generators are required to pay for every ton of carbon dioxide they emit under the European Union Emissions Trading System. Lower carbon prices?allow for cheaper power production from fossil fuels. The newspaper Les Echos reported that France had slashed its plans to build out renewable energy until 2035 due to the sluggish forecasts for electricity demand.
(source: Reuters)
