Energy Markets: The Surge Continues in May

Average power prices continued the upward momentum from April, increasing 14%.

In May 2021, they averaged €101.30 per mWh, up a whopping 313% on the same period in 2020. May surpassed April’s record price since the ISEM launch in Oct 2018.

Specifically, the outturn in May arose for the following reasons:

• Wind generation contributed only 28% of the generation mix, slightly up on April, but still low historically.

• Unscheduled Outages remain at some key CCGT generation plants (e.g. Whitegate 440MW, Huntstown 400MW). Overall average outages for May were over 2.5GW, up 21% on the April average. This manifested itself in an unprecedented amber alert on 17 May.

• Day ahead Gas prices averaged 66p/th up 18% on April averages as the prolonged winter increased demand for gas, further reducing storage levels.

Gas, Coal & Carbon

Day ahead Gas prices were up 18% on April. This was caused by prolonged winter stretched into May, further depleting storage to levels last seen in 2014.

Summer storage injection is behind schedule, therefore increasing demand for gas in Q3.  In addition, higher temperatures in Asia is increasing demand there.  As a result Asia is competing with Europe for LNG deliveries. Carbon prices continued its trajectory past €50/tonne throughout May tracking gas prices.

What’s next?

Forward prices indicate Power markets will remain bullish throughout 2021, with little relief in Q2 and Q3. Why is this the outlook?

• On going support for gas prices as gas storage levels in Europe are at multi year lows.
• Significantly, continued outages in key Irish power stations are expected to continue throughout 2021.

Disclaimer

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