The Energy crisis deepened in September
Average power prices set a new record high in September. In the month, they averaged €206 per mWh, up 338% on the same period in 2020 and 50% on the previous month.
Prices have remained at historically and unseasonably high values not ever seen before.
We saw this level of pricing in September for the following reasons:
1. Wind generation contributed just 20% of the generation mix, marginally down on an already low August….
….Meaning, renewable generation in 2021 is at multi-year lows
2. Unscheduled Outages remain at some key Irish CCGT generation plants (e.g. Whitegate 440MW, Huntstown 400MW). Overall average outages for September increased slightly.
3. Day ahead Gas prices continued their seemingly non stop spiral to record highs. After prices crashed past the £1/th milestone in August, they breached £2/th just one month later. Gas prices are up over 400% on the prior year.
Gas
- LNG deliveries to Europe remained weak due to strong demand and better prices available in Asia.
- European storage at just 72% full v 81% on average from 2016 to 2020.
- Russian gas exports collapsed during September. While reasons are not forthcoming, it’s believed that Gasprom is prioritising domestic storage firstly.
- Is Russia tactically limiting exports to fast track Nord Stream 2 approval by the EU?
Carbon
- Carbon prices yo-yo’d around €60/tonne level in September
Coal
- Coal prices increased further as increasing gas prices has brought coal based generation higher in the merit order for power.
12 months forward prices continue to increase each month in 2021
Why?
- On going support for gas prices as gas storage levels in Europe are replenished at great speed in advance of Winter.
- Poor gas imports from Russia
- High gas demand in Asia
- Significantly, continued outages in key Irish power stations are expected to continue throughout 2021.
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