Disappointingly, April saw no let up in the rise & rise of power prices so far in 2021.
- Average power prices continued the momentum from March, increasing 15%. In April 2021, they were €88.60 per mWh, up a whopping 216% on the same period in 2020. That’s a record power price month since ISEM was launched in Oct 2018.
The out-turn in April arose for the following reasons: - Wind generation contributed only 25% of the generation mix, down from 34% in March.
- Unscheduled Outages remain at some key CCGT generation plants (e.g. Whitegate 440MW,Huntstown 400MW). Overall average outages for April were over 2GW, up 41% on the March average.
- Day ahead Gas prices averaged 56p/th up 10% on March averages as the prolonged winter increased demand for gas, further reducing storage levels.
The impact of Coal, Gas & Carbon
Day ahead Gas prices are also up 10% on March due to;
- Prolonged winter increasing demand and further depleting storage to three year lows. Storage is 21 percentage points below 2020.
- For the reason above, net withdrawals from storage will further increase demand for gas later in the summer when re-stocking will take place
Carbon prices continued its trajectory towards €50/tonne throughout April due to demand caused by compliance purchasing by generators and speculative purchasing by investment funds.
What happens next?
Forward prices indicate Power markets will remain bullish throughout 2021, with little relief in Q2 and Q3. Why?
- On going support for gas prices as gas storage levels in Europe are only 23% full compared to 54% full a year earlier. Given April was a month of net withdrawals from storage, injections of LNG to storage will be required well into Q3
- Significantly, continued outages in key Irish power stations are expected to continue throughout 2021.
