Abstract
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 of this report
- 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 price trends in Europe' s most influential energy sectors.
Research and analysis highlights
Spot gas price volatility necessitates reverse flows on the BBL pipeline. The NBP-TTF spread was largely negative in Dec-06, implying the gas being shipped to the UK under long-term contracts was uneconomic. BBL reverse flows would provide an additional buffer to the TTF, potentially suppressing forward wholesale gas prices relative to the UK.
Interim power tariffs deal a further blow to retail competition in France. Rising wholesale power prices have seen French businesses clambering to return to lower regulated tariffs. Premiums will be applied to sites rejoining regulated tariffs, but they are too low, essentially ensuring these returning customers will remain with EDF going forward.
Wholesale gas prices are moving against Excelerate' s UK LNG project. When the UK and US markets reached parity, LNG imports to the UK drop significantly. The current forward wholesale price outlook will see the US gas curve overtake the NBP by Mar-07, implying Excelerate cargoes will re-directed to the financially more attractive US gas market.
Key reasons to read this report
- 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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