EU Power

February 23, 2018

The Research Team reviews the EU power market


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20 February 2018

  • Supply will likely remain tight over the next 10 days. This is mainly on the back of weak renewables. Solar and wind are predicted to be unseasonably low. This is even more important when one considers we are coming from a lengthy period characterized by moderate / strong renewable output. Planned outages are predicted to increase, leading to an amplification of the overall tightness.
  • Demand will gradually increase and peak by the beginning of week 9, when cold air masses will reach Europe directly from Siberia. Temperature anomalies are predicted to be well below average for most of the European regions, in some instances exhibiting a record-breaking behaviour. Capacity utilization of fossil fuels is forecast to increase due weak renewables. This is interpreted as a positive price development.
  • Our macroeconomic view is still strongly supportive of a bull trend. Despite a marked monthly volatility, the PMI, as well as the industrial production, have been steadily increasing since Q2 / Q3 2016. The latest available data on chemical and cement production exhibit a downward and upward trend, respectively.