Sharp downward correction in power and EUA prices

Profit taking after an historical rally dragged overbought EUA prices sharply down on Thursday with a record daily loss of €8.68/ton for the benchmark Dec-21 contract which briefly traded below the €80/ton mark. The correction filtered through power curve prices on the back of reports that the French government is considering an increase of the ARENH ceiling (EDF nuclear generation sold at a preferential rate to alternative suppliers) to limit the impact of soaring power prices on French end users. The France base Jan-22 contract plunged by more than €25/MWh day-on-day.

Power prices could hold steady today on the back of strong gas prices, a colder revision of temperature forecasts for the end of December and possibly stable EUA prices after sharp losses recorded yesterday. In the short-term, mild and windy weather could continue to exert bearish pressure on spot power prices.