DOGEF - Power Price Normalisation And Grids Expansion In European Utilities
2024-01-31 08:30:00 ET
Summary
- The energy crisis is behind us, and the European Commission has taken action to prevent further disruption over the coming years.
- European utilities will continue to grow in terms of both cash flow generation and investment, but at a less hectic pace.
- The extremely elevated power prices seen in 2022 and 2023 are also entering into a normalisation phase.
By Nadège Tillier , Head of Corporates Sector Strategy
The elevated gas and power prices of 2021 and 2022 are behind us. In France, where half of the nuclear fleet was out of service for maintenance, the baseload 1y forward contract averaged €548/MWh in 2022 on the wholesale market. The lack of nuclear availability in the country added to the disruptions caused by the European economic recovery and the almost terminated natural gas procurement from Russia. With European utilities finding other gas providers, a phase of power prices normalisation started in 2023. Thanks to higher procurement from Norway and liquified natural gas resources from North America and Qatar, gas prices came back to lower and more stable levels. The natural gas TTF contract trades around €32/MWhc, far below the €300/MWh mark attained in mid-2022. For power prices, this means more acceptable tariffs for residentials and corporates – although in 2023, they were still three times more expensive than in the 2016-2019 period.
The TTF 1 Month forward contract price (EUR/MWh) has eased
Refinitiv, ING
Actions have been taken to avoid another energy crisis
The Dutch TTF natural gas contract (one month forward) traded around €32/MWh at the end of 2023. The price is far below what the markets experienced in 2021-2022, but still twice as much what consumers were paying in the 2016-2019 period....
Power Price Normalisation And Grids Expansion In European Utilities