Nordic power climbs further on cold, dry outlook

The January contract was last seen up EUR 2.40 at EUR 80.50/MWh and its highest since 8 December, while the Q1 contract was EUR 2.37 higher at EUR 77/MWh, which was also a two-week high.

Prices continued to rise on similar signals seen yesterday, with cold, dry forecasts for January confirmed, as well as strong prices for German power, said traders at Energi Danmark in a note.

The most recent weather forecasts predicted temperatures to average -3.4C next week, down from -0.1C this week and the outlook for January was also cold, according to data from Montel Energy Quantified (EQ) data showed.

Forecasts were also fairly dry, with various models predicting rain and snow equivalent to 5.2-8.8 TWh of potential hydropower output, against a seasonal average of 7.5 TWh.

The hydrological balance – measuring hydropower reserves in reservoirs, snow and soil – was set to worsen from 3.4 TWh below normal currently to 4.2 TWh on 1 January.

Colder forecasts for the rest of Europe had also led to higher prices, with the German January power last seen up EUR 2.19 at EUR 91/MWh.

Subdued spot
On the spot market, however, prices were likely to be subdued at the start of Christmas due to low demand and high wind power output, said Eylert Ellefsen, senior analyst at EQ.

Average wind speeds were forecast at 16-17 GW, or around 3-4 GW above normal, he added.

Ellefsen predicted a Nordic system price of EUR 25-30/MWh during the weekend, rising to around EUR 45/MWh in the days between Christmas and New Year, while Germany could see negative prices on Sunday or Monday.

Prices would generally be weighed down by low consumption in Germany over Christmas and by a strong contribution from nuclear production in France, he added.

The Nordic day-ahead contract for Saturday was last seen at EUR 25.50/MWh, indicating a decline from the current system price of EUR 35.38/MWh.