Stronger wind put German spot power below expectations

The German wholesale power spot index is expected to remain below market expectations for this month because of increased wind generation, with the discount to France in the day-ahead market expected to narrow despite high French nuclear unavailability.

The base-load German spot index is on track to deliver across September at an average of €379.60/MWh — based on Argus forward assessments. This is down from an August average of €465.16/MWh and is €95.40/MWh lower than Germany's September value at expiry.

Onshore wind power generation was 7.7GW this month, up by about 3GW from August, while offshore wind power output was twice as high on the month so far, at 2.6GW. They have jointly represented 18pc of the energy mix in September, compared with 11.2pc in August. And the overall renewable share in the German electricity mix has been 46.5pc in September, while it stood at 44.8pc last month, according to data from research institute Fraunhofer ISE.

Forecasts for wind power in Germany were revised higher by 2.8GW for 16 September, 3.5GW for 18 September and about 8.8GW for 19 and 20 September. Output is expected at a 21.1-31.7GW range over the next four days.

On the other hand, gas burn has averaged 5GW in September, about 1GW lower than last month. The VTP day-ahead gas price has been volatile this month, reaching a high of €229.98/MWh on 6 September to fall to €190.53/MWh on 12 September — despite the indefinite shutdown of the Nord Stream 1 gas pipeline in late August. But it rose back sharply to €219.70/MWh on 14 September.

Working day-ahead clean spark spreads for 55pc-efficient units averaged €16.01/MWh during 1-14 September, although they have been priced out already in four sessions this month. The European Commission said on 14 September that its envisaged energy emergency package would not contemplate a price cap for Russian pipeline gas imports.

Coal-fired generation has been 8.5GW so far this month, up by almost 1GW from August and rising for the fourth consecutive month. The ARA daily prompt index average is running at €50.38/MWh this month, €1.25/MWh lower than in August, although operational day-ahead margins for 36pc coal-fired generation have been €64.15/MWh narrower on the month, averaging at €210.15/MWh.

German utility Uniper notified that the period of intermittent operation at the 1.05GW Datteln 4 coal-fired plant has been further extended until the end of this month, owing to low water levels on the Rhine river. Monitoring service agency Elwis expects the Rhine's water levels to remain under the threshold of unrestricted barging of 180-200cm until the evening of 17 September, while levels as low as 118cm are expected between 26-28 September with a probability of about 60pc.

The German discount to the French power spot index is on track to complete September at an average of €56.33/MWh, while Germany expired €105/MWh below France September at the end of August. But Germany delivered at a €197.80/MWh discount to the French market for 16 September, the widest so far this month.

Nuclear output has averaged 23.7GW in France in September so far, the lowest this year. Nuclear unavailability is scheduled at 31.6GW for the rest of this month, up by more than 10GW on the year. French grid operator RTE indicated in its security-of-supply scenarios that domestic coal burn was likely this winter in case of low nuclear availability.

Net exports to France have been more than three times higher than in August, averaging 1.8GW so far this month. Net exports of 2.8GW are scheduled towards France on 15 September.

The discount to the French week 38 tightened on 14 September to €30/MWh, its narrowest since 5 September. And the German week 39 was assessed €35/MWh below France, the narrowest discount this week.

By Gabriel Lorca Aicardi