Clean spark spreads surge as temperatures increase

Last week, temperatures rose significantly in Northwestern Europe, and due to a dominant high-pressure area, there was little to no wind. As a result, the residual demand in France, the Netherlands, and Germany was high. In addition, the overall power demand increased in France. This prompted a greater reliance on conventional power plants, some of which had been idle due to the above-average renewable generation in previous weeks. Consequently, prices surged during evening peaks, reaching 290 €/MWh on Wednesday evening, for example. Towards the end of the week, temperatures decreased again.

Thursday and Wednesday saw significant day-to-day deviations in weather forecasts. On both days, there were moments of much lower generation than what was initially predicted on the previous day, and most conventional power plants were operating at maximum during these times. Ultimately, on both days, emergency capacity was called upon by TenneT, requiring upward regulation and causing prices to rise to nearly 2000 €/MWh. The average Dutch spot price was 117.5 €/MWh last week compared to 97.1 €/MWh the previous week.

The gas price decreased slightly compared to the previous week, and by the end of the week news emerged suggesting that the strikes at Australian LNG producers might had been averted. September decreased by one and a half euros to 34.8 €/MWh. October decreased by over 4 euros to 37.8 €/MWh. CO2 became slightly cheaper, declining by almost 3 euros to 85.4 €/EUA.

Dutch power contracts became cheaper for the upcoming months. September decreased by one and a half euros to 93.7 €/MWh, and October became almost 8 euros cheaper, closing at 100 €/MWh. While power prices decreased, the clean spark spreads for the same months improved slightly. The September CSS improved by nearly 3 euros but remained negative at -3 €/MWh. The October CSS also improved, by about one and a half euros, to -2.7 €/MWh.

Last Wednesday, it was announced that the French government would allow coal-fired power plants to operate until the end of next year. Coal plants in France will temporarily have more leeway to emit CO2, potentially allowing them to operate an additional 500 hours. Coal-fired power plants, with a total capacity of just under 2 GW in France, make up a very small portion of the country’s generation mix.

For 2024, both gas and CO2 became cheaper. The gas contract decreased by almost 3 euros to 52.1 €/MWh, and CO2 became nearly 3 euros cheaper, settling at 89.6 €/EUA. The Dutch power contract became nearly 6 euros cheaper, closing at 124.8 €/MWh. The 2024 CSS improved by about one euro but remained negative at -6.8 €/MWh.

Weekly changes