Curve Retreats from Spike on Russia Sanctions
European power forwards on Tuesday fell sharply from opening highs hit on concern about a possible Russian backlash to economic sanctions from the European Union.
German baseload power for the year ahead, calendar year 2015, was last at 35.35 euros ($47.4) a megawatt hour, down 70 cents from its opening high of 36.05 euros that had represented the highest price since March 10.
"It is not so much that concern over sanctions and retaliation is off the radar but it seems further away and may hit other areas than energy," one trader said.
"Meanwhile, those prices have encouraged sellers."
The EU intends to step up sanctions in the wake of the downing of a Malaysian airliner on July 17 over eastern Ukraine which is held by Russian-backed separatists.
EU diplomats will try for a broader deal at talks that could last into Tuesday night. Measures being considered include targeting capital markets, defence and sensitive technology.
The Cal '15 contract is 1.3 percent above its level since the plane crash crisis erupted.
The less liquid contract for French power delivery in 2015 was at 42.30 euros/MWh, 45 cents down from its intraday high.
Crude oil, carbon permits and gas prices were lower, weighing on power, as generators have to factor costs in the other markets into electricity prices calculations.
Coal prices for delivery in north Europe reversed down after a firmer start, with traders dismissing the as yet remote chance that Russian coal imports could become subject to sanctions.
In spot trading, prices were split in the two markets, with Germany maintaining a premium over France.
German day ahead baseload was 1.8 euros/MWh down at 34 euros per MWh, as the impact of low wind and merely modest solar supply contributions was more than offset by a nuclear reactor rejoining the grid as planned, and more thermal capacity becoming available.
E.ON's Isar 2 came back on the grid late on Monday.
French day ahead power rose 3 euros on the day to 23.50 euros/MWh but stayed well below their German counterpart in the summer season's demand lull.
Wind power groups said that Germany added 1,723 megawatts (MW) of onshore wind power capacity in the first half of 2014, bringing the installed total at the end of June to 35,389 megawatts (MW).
Another industry group, BDEW, issued statistics showing that power from renewable resources in the first half of 2014 made up 28.5 percent of German power consumption, up 3.9 percentage points from the same 2013 period and the highest half-year result to date.
($1 = 0.7456 Euros)
(Reporting by Vera Eckert; editing by William Hardy)
