Spot Prices Up on Wind Power Drop

A drop in wind power levels after a stormy weekend helped boost European prompt power prices on Monday, but windy weather is set to continue, keeping a lid on the price gains, traders said.

"Thermal plant supply is also quite comfortable. Solar power output is weak and demand is flat at high levels," one said.

Germany's spot contract for Tuesday delivery was 7.95 euros up from the price paid for Monday at 27.30 euros ($32) a megawatt hour, while the equivalent French contract was 1.50 euros up at 34.75 euros per MWh.

Both December and January have been extremely windy, capping spot prices even in high demand periods.

Wind power supply on Monday in Germany was at nearly 25 gigawatts (GW), down 600 MW from the weekend and due to fall to 19.5 and 19.3 GW respectively on Tuesday and Wednesday, Point Carbon figures showed.

Grid firm TenneT said wind power supply in Germany last Friday had peaked at 30.7 GW, an all time record, putting strain on networks and necessitating selective switch-offs that require costly steering measures.

Some 4.8 GW of conventional capacity had to be temporarily switched off in its high voltage transmission zone, that runs from the North Sea through to southern Germany, TenneT said.

German met office DWD said a new low pressure front from Thursday would bring back gale-force winds, accompanied by rain and above average temperatures.

Forward power prices traded down as oil prices extended their decline in a weak fuels environment which last week contributed to send the power curve to 11-year lows.

Germany's Cal' 16 baseload position, the benchmark for European electricity prices for delivery next year, last traded 20 cents down at 31.60 euros/MWh.

The equivalent French contract was 30 cents down at 38 euros/MWh.

Brent crude oil dropped well below $49 a barrel as Goldman Sachs slashed its short-term price forecasts and Gulf producers showed no signs of curbing output.

Carbon prices were down 0.5 percent at 6.77 euros per tonne and coal cif north Europe for 2016 also declined sharply by $1/tonne from the previous McCloskey index, to $60.85 a tonne.

The only exception to the bearish picture were UK gas prices which posted gains on spot tightness in Norwegian production platforms.

Reporting by Vera Eckert