EU curve power prices retrace recent gains but tight fundamentals remain supportive

Warmer and calmer weather expectations for the week ahead pushed spot power prices sharply up on Friday amid strong coal and gas prices. Day-ahead prices hence averaged 316.02€/MWh in Germany, France, Belgium and the Netherlands, +27€/MWh day-on-day.

On the curve, most contracts retraced some of the strong gains recorded earlier in the week. Prospects of lower gas demand for power generation in Germany due to potential curtailments measures imposed by the federal government to save gas for storage injections may have played into the bearish sentiment. In France, WIN22 prices continued to rise and to reach new record highs with the peakload Q4-22 contract closing just below the €1200/MWh mark on Friday. 

In terms of outlook for today, steady gas and coal prices should continue to be supportive for power curve prices. Note that power supply issues are also hitting Japan with an unusual heatwave expected to boost power demand for cooling purposes. The Japan Trade Ministry asked Tokyo’s residents to save as much power as possible with risks of shortages at their highest in the end of the afternoon when solar power generation begins to decline.