Product Type: Market Research Report
Published by: Datamonitor
Published: December 2006
Product Code: R313-18643Description 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 peak and baseload power prices in the EU's three key electricity markets - the UK, Germany and France.
- Key analysis of cross-border price differentials and commodity spreads relating to current issues that are driving European energy debate.
- A comprehensive graphical breakdown of wholesale, retail and liquidity trends in Europe's most influential energy sectors.
Highlights
Relative wholesale gas price pressure is converging for suppliers across Europe. In October 2005, the UK stood alone with wholesale price pressure at 81%. By October 2006, however, a fall in the NBP curve has seen the UK fall to 67% wholesale price pressure below both Belgium and France.
France's government continues to subsidise an artificially low price of gas through its involvement in dominant supplier GDF. While the state sets a fixed tariff for gas, often at or below the costs of production, that also co-exists with a liberalised market, new entrants will continue to struggle to make headway in the French gas market.
Power price arbitrage drives Germany to net export status with France. If French hydro output continues to improve, France's net export status with Germany should return pressuring the forward price arbitrage between the markets to revert to its historic position.
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.
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Table of Contents - DATAMONITOR VIEW
- CATALYST
- SUMMARY
- METHODOLOGY
- ANALYSIS
- This brief assesses key developments in Europe's key wholesale energy markets
- Unseasonably high temperatures leave NW Europe awash with gas
- Oversupply pushes the NBP spot gas market into the doldrums
- Fear premium is steadily eroding away from the UK gas curve
- Despite Interconnector flip, Belgian spot gas prices track the NBP
- Zeebrugge gas curve continues to mirror UK market sentiment
- TTF maintains its spot price premium on reduced Norwegian flows
- Dutch gas curve still the cheapest in NW Europe ahead of BBL test flows
- Mild winter demand continues to suppress European electricity prices
- Spot power prices hit a 21-month low on UK gas supply glut
- Confidence grows on the UK power curve as mild weather persists
- German spot power prices fall as strong winds offset plant outages
- Speculative buying limits losses along the German power curve
- Rising hydro output precipitates French spot power price slide
- Weaker carbon hits the French power curve harder than Germany
- Relative wholesale gas price pressure is converging for suppliers across Europe
- New entrants face an uphill struggle to compete in the French gas market
- Power price arbitrage drives Germany to net export status with France
- GLOSSARY
- This brief contains a number of industry standard terms
- APPENDIX
- Further reading
- Datamonitor Consultancy
- Ask the analyst
- List of Figures
- Figure 1: UK spot gas price, Nov-03 to Oct-06
- Figure 2: UK forward gas prices, Nov-03 to Oct-06
- Figure 3: Belgian spot gas price, Nov-03 to Oct-06
- Figure 4: Belgian forward gas prices, Nov-03 to Oct-06
- Figure 5: NW European spot gas price comparison, Nov-03 to Oct-06
- Figure 6: NW European forward gas price comparison, Nov-03 to Oct-06
- Figure 7: UK spot baseload electricity price, Nov-03 to Oct-06
- Figure 8: UK forward baseload power prices, Nov-03 to Oct-06
- Figure 9: German spot baseload power prices, Nov-03 to Oct-06
- Figure 10: German forward baseload power prices, Nov-03 to Oct-06
- Figure 11: NW European spot baseload price comparison, Nov-03 to Oct-06
- Figure 12: NW European forward baseload price comparison, Nov-03 to Oct-06
- Figure 13: The European wholesale-retail gas price landscape
- Figure 14: Year-on-year change, by country
- Figure 15: Indicative French wholesale gas margins in Q1-07, by market
- Figure 16: Franco-German forward power price differential
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