In the third week of November, prices in most European electricity markets rose as a result of higher gas prices, higher electricity demand and falling solar production. However, in the MIBEL market, prices fell thanks to increased wind production, which led to the lowest price since June 2021 on November 19. Wind also increased in Italy, where it doubled the previous week's output, and in France
Solar photovoltaic and thermoelectric production and wind production.
During the third week of November, solar production decreased from the previous week in all markets analyzed in AleaSoft Energy Forecasting. The smallest drop was recorded in the French market and was 26%. In the Italian market, production decreased by 31%, while in the rest of the markets it fell by between 36% and 46%.
For the week beginning November 21, AleaSoft Energy Forecasting 's solar production forecasts indicate a reduction in production in Spain while little change is expected in the German market. On the other hand, solar production is expected to increase in the Italian market.
During the week of November 14, wind power production increased compared to the previous week in most of the markets analyzed in AleaSoft Energy Forecasting . In the Italian market, production was more than double that recorded in the previous week, with an increase of 121%. On November 18, this market reached its highest daily production since September 17, at 129 GWh. On the Iberian Peninsula, wind power production rose by 81% compared to the second week of November, with the production of 388 GWh on November 16 in the Spanish market, which was the highest since March 17, and the production of 80 GWh on November 15 in the Portuguese market, which was the highest since October 27. The French market also saw a significant increase of 25%, with the November 17 production of 282 GWh, the highest since April 7, 2022, standing out. The exception was the German market, where production with this technology fell by 16%.
For the week of November 21, AleaSoft Energy Forecasting 's wind power production forecasts indicate a reduction in all markets analyzed, except in the French market where production is expected to remain little changed from the previous week.
In the week of November 14, electricity demand increased across the board in the European electricity markets analyzed compared to the previous week. The largest increase was recorded in the Great Britain market, of 7.9%, followed by rises of 7.8% in the French market, 7.6% in the Netherlands market and 7.4% in the Belgian market. The smallest growth was in the Italian market, up 0.7%. In the other markets, increases ranged from 1.1% in the Portuguese market to 3.3% in the German market. The increase in electricity demand during this period was favored by the general decline in temperatures in European countries. France and Belgium were also influenced by the recovery in demand following the Armistice Day holiday on November 11.
For the week of November 21, according to demand forecasts made by AleaSoft Energy Forecasting, demand is expected to continue to increase in most European markets, mostly favored by lower temperatures than those recorded during the previous week. However, demand is expected to decline in the Belgian market.
European electricity markets
In the week of November 14, prices in almost all European electricity markets analyzed in AleaSoft Energy Forecasting increased compared to the previous week. However, the MIBEL market in Spain and Portugal saw declines of 17% and 18%, respectively. On the other hand, the largest percentage price increase of 179% was in the Nordic Nord Pool market, while the smallest increase was in the Italian IPEX market of 20%. In the remaining markets, increases ranged from 31% in the UK N2EX market to 54% in the Belgian EPEX SPOT market.
In the third of November, the highest average price, at 238.00 E/MWh, was from the Italian market . On the other hand, the lowest weekly average was that of the Nordic market, at E92.13/MWh. In the rest of the markets, prices ranged from E100.85/MWh in the Portuguese market to E196.58/MWh in the French market.
Regarding hourly prices, on November 21, between 17:00 and 18:00, a price of 335.88 E/MWh was reached in the Nord Pool market, the highest in that market since September 30. Also the daily price on Monday 21, 228.58 E/MWh, was the highest since September 30 in the Nordic market.
In contrast, the lowest daily price of E67.38/MWh since September 17 was recorded on the MIBEL market in Spain and Portugal on Saturday, November 19. If the adjustment for the gas cap that some consumers have to pay on the MIBEL market is taken into account, the price on November 19 stood at 57.39 E/MWh, the lowest since June 20, 2021.
During the week of November 14, the 42% increase in the weekly average price of TTF gas in the spot market compared to the previous week exerted its upward influence on prices in European electricity markets. The general increase in electricity demand and the decline in solar production also contributed to the price increases recorded. In addition, in the case of the German market, wind power production declined. In contrast, the significant increase in production with this technology on the Iberian peninsula allowed prices to fall on the MIBEL market.
AleaSoft Energy Forecasting 's price forecasts indicate that in the fourth week of November prices could continue to rise in most of the markets analyzed, influenced by increases in demand and decreases in wind power production in most markets. However, prices could decline in the Iberian and UK markets.
Brent, fuels and CO2
The closing prices of Brent crude oil futures for Front-month on the ICE market declined on most days in the third week of November. On Monday 14, a closing price of 93.14 $/bbl was recorded, 4.9% lower than on the previous Monday. As a result of the downward trend, the closing price on Friday, November 18, at $87.62/bbl, was 8.7% lower than on the previous Friday. This price was also the lowest since September 27.
Demand concerns due to the economic situation exerted its downward influence on Brent oil futures prices in the third week of November. On Monday, November 14, OPEC lowered its oil demand growth forecast for 2022 and 2023. On November 15, the International Energy Agency also downgraded its demand forecast for 2023. In addition, the increase of COVID?19 cases in China also contributed to concerns about the evolution of crude oil demand and to the decline in prices in the latter part of the week.
As for TTF gas futures on the ICE market for Front-month, after recording a closing price of 97.85 E/MWh on Friday, November 11, the lowest since June 14, they rose to 113.70 E/MWh on Monday, November 14. This price was 3.7% higher than the previous Monday. On Tuesday, prices continued to rise and reached the week's highest closing price of E124.10/MWh, 5.0% higher than the previous Tuesday. Subsequently, prices fell to 112.56 E/MWh on Thursday, November 17. On Friday, however, prices recovered to reach a closing price of E115.51/MWh, which was 18% higher than the previous Friday.
The high levels of gas reserves favored price declines in recent months. But the number of vessels waiting to unload at the regasification plants is decreasing and the drop in temperatures could favor higher gas prices in the following weeks.
As for CO2 emission allowance futures on the EEX market for the December 2022 benchmark contract, they started the third week of November with a Monday 14 closing price of E75.23/ton. This price was 2.9% lower than on Monday of the previous week. From Tuesday to Thursday, closing prices showed variations of less than 1.0% with respect to prices on the same days of the previous week. However, on Friday, November 18, a closing price of E72.47/tonne was recorded, 4.4% lower than on the previous Friday.
AleaSoft Energy Forecasting's analysis of the outlook for European energy markets and the financing and valuation of renewable projects
Next Thursday, November 24, a new edition of AleaSoft Energy Forecasting and AleaGreen's monthly webinars will be held. The speakers will be Oriol Saltó i Bauzà, Associate Partner at AleaGreen and Jaime Vázquez, Director, PPA & Finance at Soto Solar. The panel will be joined by Antonio Delgado Rigal, CEO of AleaSoft Energy Forecasting and Tomás García, who serves as Senior Director, Energy & Infrastructure Advisory at JLL. The webinar will provide the usual analysis of the evolution of the European energy markets. In addition, we will analyze the current situation and trends in the financing of renewable energy projects, comparing PPAs with full merchant projects.