Abstract
Overview
Introduction
The growing role of wholesale traded energy markets across Europe creates a greater need for players throughout the value chain to be aware of the latest market movements and developments. From the wellhead or power station gate to the end-user, volatility in the spot and forward price of power and gas is creating an increasingly challenging environment for all market participants.
Scope
- An examination of the wholesale gas price trends in Europe' s three key markets - the UK NBP, the Zeebrugge Hub and the Dutch TTF.
- An assessment of traded power prices in the UK, Belgian, Dutch, German and French wholesale power markets.
- Insight and analysis into the impact of wholesale markets on the wholesale / retail price interface.
Report Highlights
Underlying commodities provided little relief to suppliers as prices soared.
BEB outturned at a premium to Henry Hub prices.
European power prices continued to rise, led by French baseload prices.
Reasons to Purchase
- Establish the current level of wholesale and retail energy prices and the fundamental drivers behind movements in the traded value of gas and power
- Understand how wholesale pricing impacts different facets of the value chain, identifying the potential to limit risk through hedging strategies
- Forecast future developments in the traded price of gas and power in order to successfully take advantage of arbitrage opportunities
Table of Contents
- DATAMONITOR VIEW
- CATALYST
- SUMMARY
- ANALYSIS
- Underlying commodities provided little relief to suppliers as prices
soared
- Underlying commodities provided little relief to suppliers as prices soared
- West Texas Intermediate and Brent oil price spreads narrowed as prices peaked in December
- Oil traders' parted from fundamentals as crude futures jumped
- Coal prices will impact upon key investment decisions in 2008
- In Europe, gas and oil product prices are decoupling
- In the UK, there are no clear long-term links between oil and gas prices
- Brent oil prices and NBP gas prices show little correlation
- In Germany, BEB gas prices weakly track the crude benchmark
- BEB outturned at a premium to Henry Hub prices
- Gas continued to be an important fuel in the stationary sectors
- European power prices continued to rise, led by French baseload prices
- In Belgium, near-end prices made an upward adjustment as temperatures dropped
- In France, wholesale power prices traded at new highs over November
- In Germany, power prices rose as suppliers came under pressure
- In the Netherlands, power prices firmed at the near-end of the forward curve
- In the UK, low temperatures increased prices on all contracts
- European gas prices increased, but mainly on the near-end
- NBP contracts rose due to lower temperatures and supply expectations
- The Belgian gas market mirrored the NBP, as only year ahead contracts fell
- Underlying commodities provided little relief to suppliers as prices
soared
- APPENDIX
- This brief builds upon Datamonitor' s extensive pricing proposition
- Glossary
- This brief contains a number of industry standard terms
- Our analysis builds on other sources to provide greater insight
- Further Reading
- Extended Methodology
- We assess the profitability of fossil fuel plants across northwest Europe
- Our bespoke services can be tailored to your specific needs
- Ask the analyst
- Datamonitor consulting
- Disclaimer
- List of Figures
- Figure 1: The spread between West Texas Intermediate and Brent crude oil prices has decreased over the last quarter
- Figure 2: Price expectations for crude oil changed dramatically from six months ago, decoupling demand and supply
- Figure 3: The price of coal will have a significant role to play in 2008' s generation mix and suppliers' long-term investment decisions
- Figure 4: Although the National Balancing Point and Brent spot markets trade within similar boundaries, the relationship is tenuous
- Figure 5: NBP gas and Brent crude oil prices show a high degree of year-on-year variation
- Figure 6: Gas and oil prices showed limited co-movement in the last half of 2007
- Figure 7: Volatility in world gas markets is evident, with BEB spot prices outturning at a premium
- Figure 8: Gas accounts for a substantial share of stationary sector energy consumption in the majority of Europe' s biggest economies
- Figure 9: European power prices continued to rise, led by French baseload prices
- Figure 10: Contracts at the near-end of the forward curve rose sharply during December
- Figure 11: A combination of demand drivers and regulatory change firmed French baseload contracts at their highest levels for three years
- Figure 12: German suppliers remained under pressure as baseload prices continued their upward trend
- Figure 13: Near-end prices rallied and characteristically followed the German market, increasing on October' s close
- Figure 14: December saw the most explicit signs of demand-side adjustment in combination with higher supply-side costs
- Figure 15: European gas prices increased, but mainly on the near-end
- Figure 16: Colder, less predicable weather affected all contracts at the NBP, most significantly at the short-end of the curve
- Figure 17: Zeebrugge year ahead prices softened, while all other contracts reacted to changing temperatures and the bullish trend at the NBP
- Figure 18: Energy pricing proposition
- Figure 19: Generation spread methodology
