Power Markets Is Expected To Remain Very Tight In 2023
Aa
Share
In 2022 Europe not only faced a major gas crisis, it also had to cope with a broader power crisis. Yes, this was partly a result of what was going on in the gas market, but there are a number of other factors which have helped to see power prices skyrocket.
High power prices across Europe
Lower nuclear capacity
First, France experienced prolonged periods of nuclear capacity outages. This is partly due to regular maintenance and refuelling, but rea ctors are also taken offline due to more serious weld issues and signs of corrosion. Nuclear summer output in 2022 stood at around 25 GW, well below the levels above 40 GW seen in the summer of 2021. Nuclear output was also down because of heatwaves which limited the amount of cooling water for nuclear power plants. As a result, France experienced the highest power prices in Europe, while it used to have the lowest when nuclear power operated at full capacity. The distress in the French power had knocklower exports of electricity to the industryon e ffects on Germany due to rich southern part of the country.
Unusually hot weather
Second, Europe’s hydropower market was also negatively impacted by severe droughts. Reservoirs started drying up. Hydro stocks i below the 5year average. n France, Spain, Italy and Portugal were all
Finally, Rhine water levels recorded record lows in 2022. As a result, some river coal plants are facing supply issues and cannot generate as they would like.based
We expect power markets to remain very tight in 2023, with benchmark APX prices averaging €375/MWh. The height of the summer price peak will depend on whether Europe will experience another drought and whether it can keep existing nuclear capacity running while maximising output from coal always, power markets remafired power stations. And as in local markets with large variations in the level of power prices across European bidding zones .
Read the article on ING Economics
Disclaimer
This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
