Monthly Price Brief - A Review of European Gas and Power Price Trends: November 2007

Table of Contents

DATAMONITOR VIEW

CATALYST

SUMMARY

ANALYSIS

• Medium-term energy supply looks stable, despite National Grid' s warnings
• The average number of HDD in November illustrates that a cold snap in winter 2007-08 is not guaranteed
• UK wholesale power traded around the seasonal norms
• NBP gas prices showed similar stability to power prices
• The UK ranks lowest in the European storage capacity table
• European baseload power prices firmed across the board during Q4
• In Belgium, near end prices firmed while year ahead contracts remained stable
• French power prices spiked as the winter cold snap took effect
• German baseload prices rose sharply as temperatures dropped
• Dutch power prices pivoted, as bullish tones dominated baseload trading across northwest Europe
• The UK showed signs of pricing stability as firmness characterized the fourth quarter
• European gas prices were affected by seasonal pressures in Q4
• In the UK, bullish NBP speculators continued to push up gas contract prices
• Supply concerns and the late arrival of cold weather sent prices up at the Dutch TTF hub
• Belgium' s Zeebrugge hub followed the NBP, spiking more sharply at the near end of the curve

APPENDIX

• This brief builds upon Datamonitor' s extensive pricing proposition
• Glossary
• This brief contains a number of industry standard terms
• Our analysis builds on other sources to provide greater insight
• Further Reading
• Extended Methodology
• We assess the profitability of fossil fuel plants across northwest Europe
• Our bespoke services can be tailored to your specific needs
• Ask the analyst
• Datamonitor consulting
• Disclaimer

List of Figures

• Figure 1: The inconsistent number of HDD during November suggests that the coldest winter temperatures were not seen during the month.
• Figure 2: Average power prices in October were marginally above the seasonal levels for the M+2 contract
• Figure 3: Barring the spike in 2005, gas prices are stable and hover around the seven-year mean.
• Figure 4: The UK ranks lower than its continental competitors, as securing supply is the number one priority.
• Figure 5: European baseload power prices firmed across the board during Q4
• Figure 6: The near end of the curve prices rose during September and October in response to short-term demand drivers.
• Figure 7: Year ahead prices firmed; however, short-term concerns were evident at the short end as prices spiked abruptly.
• Figure 8: Month and quarter ahead contract prices spiked significantly, reaching a three-year high on the quarterly contract.
• Figure 9: As in Germany, Dutch baseload power prices increased on all contracts, particularly on the month and quarter ahead products.
• Figure 10: Prices turned upwards as traders felt the winter cold; however, expectations appeared to be seasonal.
• Figure 11: European gas prices were affected by seasonal pressures in Q4
• Figure 12: Traders pushed up gas contract prices at the NBP, but remained undecided on price stability on the far side of the curve for 2008-09.
• Figure 13: Prices increased sharply at the TTF with a late but significant drop in temperature.
• Figure 14: As with prices at the NBP, the Belgian gas hub saw higher prices as winter 2007-08 set in.
• Figure 15: Energy pricing proposition
• Figure 16: Generation spread methodology