Mixed power prices in Europe, strong volatility in the EUA market

Power prices in Europe continued to diverge on Wednesday amid a volatile session for EUA prices and opposing trends for gas and coal prices. Warm river concerns supported Q3-22 prices in France while lingering dry weather widened further the Italian premium compared to France for June delivery. Falling wind power generation as well as news of an industrial action potentially impacting French nuclear plants from Wednesday evening for 24 hours provided support to spot prices in NW Europe.

On the curve, a strong rebound in coal prices pushed calendar prices higher while near-curve contracts tracked gas prices lower. French baseload Cal 23 moved back above the €300/MWh mark while French peakload prices for Q1-23 delivery settled close to the €1000/MWh mark at €985.48/MWh on the EEX exchange, up €450/MWh compared to a month ago on the back of a worsening nuclear generation outlook. The benchmark EUA Dec 22 contract traded in a wide €81.9-90.4/t range yesterday as players digested compromise amendments among ENVI members ahead of the vote on ETS reform proposal on May 17.

Baseload year-ahead power prices in Europe

In Spain, the government is set to approve a Eur50/MWh cap on the gas price for power generation in a special meeting of ministers May 13. Details of the mechanism are still unknown. 

The sharp rebound in European gas prices on the back of further drop in Russian gas transit through Ukraine is likely to support power prices today while EUA prices could come under bearish pressure after yesterday’s wild ride, notably as the economic outlook remains bleak overall.

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