MKonline has now updated actual consumption numbers for 2016. The numbers are as earlier based on monthly statistics from ENTSO-E, but as the format for these monthly reports has been changed from previous years, MKonline has delayed the updates as we have found some deviations in the statistics compared to earlier years. Continue reading Updated German consumption numbers for 2016
Reduced risk of coal supply shortage
Chinese authorities have now allowed all coal mines to return to 330 operational days per year again for the rest of this winter, following the previous reduction to 276 days per year from April 2016 onwards. The 20% increase of operational days will curb the price lift in coal markets and reduce the risk of coal supply shortage for coming winter months in China and also for the rest of the world.
German Cal 16 has declined approximately 1.5 €/MWh since the beginning of August as a result of the bearish coal market. In addition, the CO2 market turned bearish as well in the middle of August. The attached chart from Platts shows the development of German power and coal ARA the last 3 weeks.
The main explanation for the bearish coal market is reduced – Chinese imports of steam-coal are down nearly 35% since 2014.
Flow-based market coupling was introduced on 20 May in the CWE region. MKonline has previously published blog posts on the topic:
- CWE flow-based market coupling to be introduced 23 April on 11 February
- CWE flow-based market coupling to be introduced 20 May on 18 May
- InstantSpot – Implementation of the flow-based CWE price settlement on 20 May
In this report we will focus on observed changes in prices and border flow since 20 May. We have selected the Dutch spot market, border flow and price differences towards Germany.
Parallel runs of flow-based market coupling since 2013 indicated that the Dutch spot prices (APX) were expected to be reduced by about 2.5 €/MWh compared to the previous ATC spot settlement. It was also expected that imports from Germany would increase and consequently narrow the price difference between APX and Phelix prices.
The flow-based CWE price settlement will start on Wednesday 20 May, delayed from previously announced on 23 April. MKonline made a blog post on 11 February about the consequences of flow-based principles, and we will do a short update on this.
Flow-based market coupling
The flow-based price settlement will in general mean that the CWE countries will be stronger linked to each other, as increased utilization of the border capacities will decrease the number of hours with bottlenecks. This means that price differences between the CWE countries Germany, France, Belgium and the Netherlands will in general decrease, but due to physical constraints in the power systems and border capacities the impact from flow-based settlement will be limited and different in each country.
On Friday 23 January, we aim to update our historic data and implement a new consumption model in Germany.
Power load in Germany is an elusive variable . Not because one lacks sources but because of poor updates and internally inconsistent sources. This could be e.g. hourly numbers not summing up to aggregates over months or years, or summing up individual TSOs to national numbers. Another known issue is that they do not meet simple econometrical criteria one would expect from such data, e.g. sign of derivatives etc.
The Continental Analysis Group has made a short review of the German power market for 2014. We are showing some key numbers from the physical spot market for 2012 to 2014. In addition we give a review of the Cal-15 development and the MKonline shadow portfolio for the EEX Forward market.
Please take your time to read through the short summary. We wish you all a happy new trading year!
– Eylert Ellefsen, Head of Continental Analysis
The October edition of MKonline’s Long Term Price Forecast for Germany (LTP Germany) is set for release on Friday 31 October.
Key topics in the October edition
- Development of German power balance, including power consumption (energy efficiency, industrial development) and whether Energiewende targets can be reached
- Price scenarios for German spot market for the period 2015-2035
- Profound discussions about security of supply mechanisms, including capacity price indications
About MKonline’s LTP products
The service is aimed at professionals in need of a medium to long term view on power markets. Equity investors and macro analysts looking for updated information on markets, technological developments and changes in the political framework will find this product time saving and cost efficient. The online product turns MKonline into a one-stop-shop for your long term market intelligence.
The balancing energy market analysis (Ausgleichsenergie) intends to provide an overview of the current market situation. Unpublished balancing prices of the last days are estimated and the main price drivers are presented to support users in making trading decisions on the day-back/day-after market or to evaluate their balancing positions.
The analysis for the control reserve market (Regelenergie) on MKonline currently covers the minutes reserve market for negative and positive products in Germany. An analysis for the secondary control reserve is under development.
The analysis utilizes fundamental and stochastic price drivers as well as simulation methodologies to forecast both capacity and energy prices for the coming two weeks. In addition, the MKonline pages structure the complex control reserve data and provide a general overview of the market situation.