Impact of Coronavirus on European energy markets - Weekly tracker for 29th April 2020 - Aurora ...
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Impact of Coronavirus on European energy markets
Weekly tracker for 29th April 2020
© 2018 Aurora Energy Research Limited. All rights reserved.
29/04/2020 CONFIDENTIAL: NOT FOR EXTERNAL DISTRIBUTION
Executive Summary
Update for week commencing 20th April:1
▪ The number of reported COVID-19 cases exceeded 1 million across Europe (as at 26th April) but the
number of new cases per day has slowed relative to the start of April. The UK now has the highest
number of daily COVID deaths across Europe. The lockdown was eased slightly in Italy and Germany.
▪ Prompt Crude oil prices recovered from negative territory with Brent June-20 contracts trading at
around $20-25/bbl in recent days. Futures for 2020-2021 dropped over the last week as the OPEC+
deal was judged to be insufficient to keep pace with the ongoing collapse in demand.
▪ NBP Gas futures decreased further across the curve over the past week. NW European gas
consumption has fallen more than 40% since the start of April, whilst storage inventories remain high.
▪ EUA Carbon prices continue to hover around €20/tonne, but are still below pre-COVID levels
▪ Power demand increased week on week in Italy, Poland and Germany as COVID restrictions were
eased, but fell further in the UK and Netherlands. Demand levels are still low compared to seasonal
averages.
▪ Power prices continued to slide in the UK as a result of weak demand, low gas prices, and higher
renewables output. Power prices collapsed on Easter Monday in France and neighbouring markets,
turning sharply negative in France and Germany. Power prices in France are still well below the
regulated prices for nuclear power under the ARENH mechanism.
1. Comparisons to previous week unless stated otherwise
2About Aurora Aurora provides data-driven intelligence for the global energy transformation Source: Aurora Energy Research 3
COVID-19 Forecast Report
Scenario analysis for European power markets
Comprehensive scenario report and forecast dataset for
1 2 3
Recent impact of COVID-19 Drivers and assumptions of Forecast and implications
on European power markets changes and scenario design of COVID-19 impact
▪ Analysis of impacts on global ▪ Detailed description of framework ▪ COVID-19 impact on power prices,
economies and scenario design generation mix, capacity additions
o What is the impact on ▪ Economic Scenarios: and retirement, asset profitability
recent growth? and carbon emissions
1. Mild Global and European
▪ Analysis of impacts on global Recession ▪ Asset valuation impact compared
financial markets to stock market declines
2. Severe Global and European
o How are utility stocks Recession o How will individual assets
performing? perform?
3. Severe Global Recession and
▪ Analysis of impacts on power European Depression ▪ Industry and technology winners
markets across Europe and losers
4. Global and European
o How are power prices Depression ▪ Implications for security of supply
developing? ▪ Forecast and scenario drivers ▪ Risk of stranded assets
o How is power demand include demand, supply,
▪ All forecast data available in Excel
evolving? commodity prices, lockdown
duration, and investment/financing
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EXTERNAL DISTRIBUTIONContents
1. COVID-19 reported cases
2. COVID-19 impact on European crude oil, gas and carbon markets
3. COVID-19 impact on European power markets
4. Deep dive on French power market
5Total number of reported COVID-19 cases exceeds 1
million across Europe
Total cases per 1 million population12 Total number of reported cases12
10,000,000
Spain 4,878 EU-27 + UK
1,000,000 Spain
Ireland 3,901 Italy
Germany
Italy 3,269 100,000 UK
France
France 2,483 Netherlands
10,000
Ireland
UK 2,251 Poland
1,000
Netherlands 2,209
100
EU27+UK 2,069
Germany 1,883 10
Poland 311
1
2nd 16th 30th 13th 27th
March March March April April
1. Chart is in log scale. 2. Data to 26th April
Sources: EDCD, Worldometer 6Daily increase in number of COVID cases and deaths is
slowing across many European countries
Daily increase in reported cases12 Daily increase in COVID-related deaths12
100,000 10,000
10,000
1,000
1,000
100
100
10
10
1 1
1st 15th 29th 12th 26th 1st 15th 29th 12th 26th
March March March April April March March March April April
Spain Germany UK Ireland EU-27 + UK
Italy France Netherlands Poland
1. Data to 26th April 2. Chart is in Log scale
Sources: EDCD 7Contents
1. COVID-19 reported cases
2. COVID-19 impact on European crude oil, gas and carbon markets
3. COVID-19 impact on European power markets
4. Deep dive on French power market
8Front-month crude futures struggled to recover due to
oversupply and weak demand
Prompt crude oil futures1, Crude oil futures,
$/bbl $/bbl
60 Front-month WTI and Brent 70
maintained their bearish Near term futures dropped
trend after the tempestuous week-by-week as new
50 OPEC+ deal is not sufficient
price moves last week 60
to keep pace to the ongoing
40
demand collapse
30 50
20
40
10
30
0
-10 Futures increased for
20 2022 period onwards
-20
10
-30
-40 0
2nd 16th 30th 14th 27th
March March March April April Jan-20 Jan-21 Jan-22 Jan-23 Jan-24 Jan-25
WTI 20/04/2020 27/04/2020
Brent
Note: 1) Prompt crude futures as of 22/04/2020 present June 2020 contract prices
Sources: Aurora Energy Research EOS, S&P 9NBP futures dipped below 36p/therm on average
between 2020 and 2025
Average monthly Average monthly
NBP gas futures,1 NBP gas futures,
pence / therm €/MWh
65 25
60 ▪ NBP futures have fallen by
55 11% on average between
20 2020 and 2025 compared
50
to the previous week, as
45 weak gas demand - caused
40 15 by Coronavirus
35 containment measures and
30 warmer temperatures – is
10 expected to continue in
25 May 2020
20
15 ▪ Continued strong LNG
5 deliveries to European
10
LNG import terminals,
5 coupled with high storage
0 0 inventories, contributed to
Jan-20 Jan-21 Jan-22 Jan-23 Jan-24 Jan-25 NBP futures reaching a
new low, down 2% week-
27/04/2020 06/04/2020 on-week
20/04/2020 30/03/2020
14/04/2020 16/03/2020
Note: 1. Futures are a rolling 7 day average.
Sources: Aurora Energy Research, Reuters 10North West European gas demand remained weak, with a
plateau at around 480 mcm per day
Monthly NW Europe gas consumption, Daily NW Europe gas consumption,
bcm mcm
40 1,100
1,000
35
900 -46%
30 800
25 700
600
20
500
15 400
10 300
200
5
100
0 0
Mar- May- Jul- Sep- Nov- Jan- Mar- 1st 8th 15th 22nd 29th 5th 12th 19th
19 19 19 19 19 20 20 March March March March March April April April
Total Consumption Germany Netherlands
Min-max envelope (Nov 14 – Jan 19)1 France GB
Notes: 1) Envelopes for monthly NW Europe gas storage inventory are calculated by taking the maximum and minimum monthly values from November 2014 until January 2019.
Sources: Aurora Energy Research EOS 11Suppressed gas demand, coupled with continued LNG
imports, led to strong storage filling
Monthly NW Europe gas storage inventory, Daily NW Europe gas storage inventory,
bcm bcm
60 60
55 55
50 50
45 45
40 40
35 35
30 30
25 25
20 20
15 15
10 10
5 5
0 0
Mar- May- Jul- Sep- Nov- Jan- Mar- 1st 15th 29th 12th 26th
19 19 19 19 19 20 20 March March March April April
Total inventory Min-max envelope (Nov 14 – Jan 19)2,3
Notes: 1) Storage data is based on net daily flows. 2) Envelopes for monthly NW Europe gas storage inventory are calculated by taking the maximum and minimum monthly values from
November 2014 until January 2019. 3) Envelopes for daily NW Europe gas storage inventory calculated by taking the maximum and minimum daily values from March 2015 until April 2019.
Sources: Aurora Energy Research EOS 12EU ETS prices continued to hover around €20/tonne, but
are still down 16% compared to pre-COVID levels
Spot EUA price,
Lower Aviation demand: Global flight volumes
€/tonne
fell by 2/3rds during March. Easyjet grounded
25 its entire fleet. UK recently cancelled auction
-16% for EUA Aviation allowances
Lower Industrial demand: Factory closures due
Downward
to COVID restrictions; reduced demand for
pressure on
metals and cement due to reduced
price in short
manufacturing and construction activity
20 term
Lower Power market demand: Lower power
demand (explored in next slides) reducing
permit demand from coal and gas generators
15 ETS reforms: European Commission remains
committed to tighten ETS as part of Green
Deal, but looks likely to be delayed; Poland
Upward challenging logic of tightening ETS at this time
pressure on
price in medium
term
MSR Mechanism: will gradually remove excess
10 permits from the market.
2- 9- 16- 23- 30- 6- 13- 22-
Mar Mar Mar Mar Mar Apr Apr Apr
Sources: Aurora Energy Research, Eikon 13Contents
1. COVID-19 reported cases
2. COVID-19 impact on European crude oil, gas and carbon markets
3. COVID-19 impact on European power markets
4. Deep dive on French power market
14European power demand saw a slight increase from the
previous week, as some countries relax restrictions
Weekly sum of power demand in 2020, Change in demand versus
TWh same week last year:
Lockdown introduced
w.c. 13 w.c. 20
11 April April
10
DE: -8% -3%
9
Germany FR: -19% -14%
8
7 France UK: -12% -15%
6
ES: -11% -13%
5 UK
4 Italy
IT: -24% -5%
Spain
3 Poland PL: -13% -4%
2
Netherlands -23%
1 NL: -25%
Ireland
0
IE: -13% -7%
24-Feb 9-Mar 23-Mar 6-Apr 20-Apr
Week commencing
Data excludes self-generation and embedded renewables consumption
Sources: ENTSO-E, Aurora Energy Research 15Power demand recovers in Italy and Germany as industry
ramps up; UK and Spanish demand remains low
COVID-19 cases1 3,269 4,878 1,883
2,483 2,251
Per 1 million
population
6 4 4 3 3
22 36 31 25 35
Power demand 32 31 27
31 31
by end user2 40 28 33 45 31
Other Household Commercial Industrial
Demand recovers Demand decline persists Demand increases as Demand remained low
as Italy relaxes in France and Spain in Germany relaxes due to restrictions and
restrictions continued lockdown restrictions warm weather
Hourly load 110 110 110 110 110
during
sample
100 100 100 100 100
weeks 90 90 90 90 90
(% of same
week in 80 80 80 80 80
2019) 70 70 70 70 70
60 60 60 60 60
04:00
08:00
12:00
16:00
20:00
04:00
08:00
12:00
16:00
20:00
04:00
08:00
12:00
16:00
20:00
04:00
08:00
12:00
16:00
20:00
04:00
08:00
12:00
16:00
20:00
1) Status 26th April 2) Data for 2018 calendar year w.c. 20 April w.c. 13 April
Sources: ENTSO-E, Eurostat, Aurora Energy Research 16Prices recovered from previous low in France and Italy,
but fell further in Spain, Germany and the UK
Weekly average day-ahead power prices in 2020, Change in prices versus
EUR/MWh previous week:
50
w.c. 13 w.c. 20
Apr April
45
DE: -41% -34%
40
Poland FR: -46% +17%
35
30 UK: -17% -19%
Ireland
25 Italy ES: -24% -22%
UK
20 IT: -5% +8%
Netherlands
15 Spain
PL: -15% +19%
France
10 Germany
NL: -23% +1%
5
24-Feb 9-Mar 23-Mar 6-Apr 20-Apr IE: -9% -2%
Week commencing
Sources: ENTSO-E, Aurora Energy Research CONFIDENTIAL: NOT FOR EXTERNAL DISTRIBUTION 17Contents
1. COVID-19 reported cases
2. COVID-19 impact on European crude oil, gas and carbon markets
3. COVID-19 impact on European power markets
4. Deep dive on French power market
18Gas demand and prices, already at low levels, have slid
further down, with a sharp fall from mid-May
French monthly spot gas prices, French monthly gas demand,
€/MWh Mcm
40 170
160
French spot gas 150
30 prices in march 140
2020 were 46%
lower than in 130
March 2019 120
20
110
100
10 90
80
70
0 60
Mar- Mar- Mar- 2- 16- 30- 14-
18 19 20 Mar Mar Mar Apr
▪ Gas prices have been hit by a combination of
the Coronavirus crisis, and a mild winter ▪ Demand for gas has plummeted, especially
since mid-March and the beginning of the
▪ Prices fell below 10 €/MWh in February, a national stay-at-home order
first since the creation of the PEG exchange
Sources: Aurora EOS 19Power demand remains well below 2019 levels, with a
sharp fall since non-essential businesses were closed
Average French power demand,
GW 2019 2020
65
60
▪ French power demand has
55 been significantly down on
50 2019 levels since COVID
restrictions were introduced in
45 -14% the second week of March
40 Easter came one
▪ Demand generally drops
35 week earlier in during the Easter break. This
2020 than 2019 came one week earlier in 2020
30
Demand has not than in 2019, leading to a
25 recovered since further drop in demand.
20 Easter weekend
▪ However, power demand has
15 not recovered since Easter,
10 and remains 14% below the
same week in 2019
5
0
2-Mar 9-Mar 16-Mar 23-Mar 30-Mar 6-Apr 13-Apr 20-Apr
Week commencing
Sources: RTE CONFIDENTIAL: NOT FOR EXTERNAL DISTRIBUTION 20Prices have fallen below 20 €/MWh, significantly below
the price of nuclear power in the ARENH mechanism
Wholesale market prices,
€/MWh Spot price Average weekly price
80
60
40
20
0
-20
-40
Prices went negative
-60 on Easter Monday (see
deep dive on next slide)
-80
2nd March 9th March 16th March 23rd March 30th March 6th April 13th April 20th April
Week commencing
▪ Weekly power prices have fallen throughout March and April 2020 due to low gas prices and falling
demand
▪ In the week commencing 13th March the average price was below €10/MWh, with a significant period
of negative prices on Easter Monday (13th April)
Sources: EPEX Spot CONFIDENTIAL: NOT FOR EXTERNAL DISTRIBUTION 21Easter Monday saw prices turn negative as demand
dropped and renewables production peaked
French power market activity on April 13th Wholesale power market prices on 13th April
Generation by fuel type Wholesale prices, €/MWh
GW € /MWh
50 20
45 10
40 0 33,46
35 -10 12,30 0,69
30 0,58
-20
25 -8,87
-30
20 Prices collapsed -39,72
-40 0,69
15 to -76 €/MWh
at 4pm -50 -3,85
10
5 -60 18,21 20,07
-16,35
0 -70 24,99 23,60
18,19 3,63
-5 -80
12am 4am 8am 12pm 4pm 8pm 12am
Pumped storage Interconnector Nuclear
Hydro Other renewables Coal 00:00-08:00
CCGT Solar Price 08:00-16:00
Peaking Wind 16:00-24:00
Sources: RTE CONFIDENTIAL: NOT FOR EXTERNAL DISTRIBUTION 22EDF announced that it would cut nuclear production in
France by more than 20% in 2020
EDF annual production,
Normal level
TWh ▪ Due to the Coronavirus crisis,
-23% EDF announcement
EDF announced, on April 16th,
that it would cut its nuclear
390 390 390 production levels in France
between 2020 and 2022.
330-360 330-360 ▪ Two reasons were provided to
justify the fall in production:
firstly, COVID workforce
330 330 restrictions create tougher
maintenance conditions, which
undermine typical generation
300 level; and secondly the
reduction in power demand
resulting from the Coronavirus
outbreak and its effect on the
economy.
▪ EDF plans to increase nuclear
production during 2021 and
2022 to 330-360TWhs but
this is still 8% below normal
levels
2020 2021 2022
Sources: EDF révise son estimation annuelle de production d'électricité nucléaire, edf.fr 23Aurora continues to help you navigate the impact of
COVID-19 on European energy markets
How do our market intelligence subscribers stay up-to-date on COVID-19 implications?
▪ Power Market Forecast reports incorporating Apr May Jun
COVID impacts on commodities and demand
▪ Group Meetings will explore sensitivitieson Group Meeting
GB Flex DE RES GB Power FR DE Power
the impact of COVID on European power
markets and asset economics
▪ Podcasts with industry leaders
Market Forecast
▪ Coronavirus tracker email assessing the impact Report
on European power and commodities markets
COVID-19 Special report Consultancy & Bespoke Analytics
▪ Comprehensive exploration of the range of ▪ Bespoke scenarios for business planning and
scenarios from the fallout of COVID-19 transaction support
▪ Impact on power prices, spreads, viability of ▪ Stress testing portfolios
investments, carbon emissions
▪ Defensive/opportunistic portfolio optimisation
▪ Differences in impact amongst technologies
▪ Board/Management briefing
▪ Implications on asset values vs stock market
For more information contact Felix.Chow@Auroraer.com for GB, Ireland, France and Iberia
and Hanns.Koenig@Auroraer.com for Germany, Poland and BeNeLux
Source: Aurora Energy Research 24You can also read
