Impact of Coronavirus on European energy markets - Weekly tracker for 20th May 2020 - Aurora Energy Research
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Impact of Coronavirus on European energy markets
Weekly tracker for 20th May 2020
© 2018 Aurora Energy Research Limited. All rights reserved.
20/05/2020 CONFIDENTIAL: NOT FOR EXTERNAL DISTRIBUTION
Executive Summary
Update for week ending 17th May:1
▪ The number of new reported COVID-19 cases and deaths saw a persistent decline across Europe, as
lockdown restrictions were eased in many countries
▪ Crude oil futures rose further on global production cuts and signs of a recovery in fuel demand
▪ NBP Gas futures for 2020 declined further due to high storage inventories and weak demand
▪ EUA Carbon prices continue to hover below €20/tonne – around 20% below pre-COVID levels.
▪ Power demand recovered across many European countries as restrictions are further relaxed, but still
remains weak relative to the same period last year.
▪ Power prices declined across much of continental Europe, remaining on average 30% - 40% lower than
pre-COVID levels.
▪ Germany has seen record instances of negative price hours in 2020. This was cause by high wind in
February, and the effect of COVID restrictions in reducing power demand from March onwards.
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
5Total number of COVID-19 confirmed cases exceeds 1.3
Million across Europe
Total cases per 1 million population12 Total number of reported cases12
10,000,000
Spain 5,950 EU-27 + UK
Spain
1,000,000 UK
Ireland 4,908
Italy
Italy 3,735 100,000 Germany
France
France 3,735 Netherlands
10,000 Ireland
UK 3,632 Poland
1,000
EU27+UK 2,626
100
Netherlands 2,577
Germany 2,117 10
Poland 499
1
9th 23rd 6th 20th 4th 18th
March March April April May May
1. Chart is in log scale. 2. Data to 18h May
Sources: EDCD, Worldometer 6Most European countries have seen a sustained decrease
in number of new COVID-19 cases and deaths
Daily increase in reported cases1 Daily increase in COVID-related deaths1
100,000.0 10,000.0
10,000.0
1,000.0
1,000.0
100.0
100.0
10.0
10.0
1.0
1.0
0.1 0.1
1st 15th 29th 12th 26th 10th 1st 15th 29th 12th 26th 10th
March March March April April May March March March April April May
Spain France Ireland
Italy UK Poland
Germany Netherlands EU-27 + UK
1. Chart is in log scale. Rolling 7 day average.
Sources: EDCD CONFIDENTIAL: NOT FOR EXTERNAL DISTRIBUTION 7COVID restrictions have been loosened in many European
countries over the last fortnight
COVID stringency Index, Country Changes to restrictions
Index (0-100)
France Some schools, shops & public
0 20 40 60 80 100 amenities reopened
France Germany Shops and schools allowed to reopen
already
Germany Ireland Some shops reopen from 18th May
Ireland Italy Some shops & factories reopened from
4th May; schools closed until Sept
Italy
Netherlands Primary schools reopened 11th May;
Netherlands bars/restaurants closed until 20th May
Poland Retail & leisure premises reopened on
Poland 4th May; schools reopen 24th May
Spain Spain Some small businesses, bars and
restaurants reopened
UK UK Construction and manufacturing
operations partially resumed; primary
schools to open for selected years
1st March 1st May from 1st June
1st April 16th May
Sources; Oxford COVID-19 Government Response Tracker 8Contents
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
9Oil futures continued to recover, supported by ongoing
production cuts and easing lockdown restrictions
Prompt crude oil futures1, Crude oil futures,
$/bbl $/bbl
60 Prompt futures climbed as 70
Chinese oil demand
50 rebounded to pre-COVID-19
levels 60
40
30 50
20
40
10
30
0
-10 Futures gain momentum with
20 the combined effect of falling
-20 crude production in major
10 producers and recovering auto
-30 fuel demand
-40 0
2nd 16th 30th 14th 28th 10th Jan-20 Jan-21 Jan-22 Jan-23 Jan-24 Jan-25
March March March April April May
WTI Brent 20/04/2020 11/05/2020
04/05/2020 19/05/2020
Sources: Aurora Energy Research EOS, Reuters 10NBP gas futures remained in a bearish trend due to muted
demand
Average monthly Average monthly
NBP gas futures,1 NBP gas futures,
pence / therm €/MWh
65 25
60 ▪ The front part of the NBP
55 futures curve was further
20 hit due to limited storage
50 injection driven by full
45 inventories and warm
40 15 weather
35
▪ But this decline is in part
30 offset by the upside risk,
25 10 caused by potential
20 interruption on Russian
15 gas flows via the Yamal
5 pipeline as Poland will
10 terminate the transit deal
5 with Russia in May
0 0 without renewal
Jan-20 Jan-21 Jan-22 Jan-23 Jan-24 Jan-25
19/05/2020 27/04/2020 30/03/2020
11/05/2020 14/04/2020
Note: 1. Futures are a rolling 7 day average.
Sources: Aurora Energy Research, Reuters 11Gas demand showed a sign of slow recovery as some
COVID restrictions in Europe were lifted
Monthly NW Europe gas consumption, Daily NW Europe gas consumption,
bcm mcm
40 1,100
1,000
35
900
30 800
25 700
600 +5%
20
500
15 400
10 300
200
5
100
0 0
Apr- Jun- Aug- Oct- Dec- Feb- Apr- 1st 15th 29th 12th 26th 10th
19 19 19 19 19 20 20 March March March April April May
Total Consumption Germany Netherlands
Min-max envelope(Dec 14–Feb 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 December 2014 until February 2019.
Sources: Aurora Energy Research EOS 12NW European gas storage inventory is 10% higher than
trailing 5 year average
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
Apr- Jun- Aug- Oct- Dec- Feb- Apr- 1st 29th 26th 17th
19 19 19 19 19 20 20 March March April May
Total inventory Min-max envelope (Dec 14-Feb 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
December 2014 until February 2019. 3) Envelopes for daily NW Europe gas storage inventory calculated by taking the maximum and minimum daily values from March 2015 until May 2019.
Sources: Aurora Energy Research EOS 13EU ETS prices continued to hover around €20/tonne –
around 20% below 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
-21% 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- 16- 30- 13- 27- 9-
Mar Mar Mar Apr Apr May
Sources: Aurora Energy Research, Eikon 14Contents
1. COVID-19 reported cases
2. COVID-19 impact on European gas and carbon markets
3. COVID-19 impact on European power markets
15European power demand has seen a slight recovery as
lockdown measures are eased
Weekly sum of power demand in 2020, Change in demand versus
TWh same week last year:
Lockdown introduced
w.c. 4 w.c. 11
11 May May
10
DE: -7% -9%
9
Germany FR: -16% -8%
8
France
7 UK: -21% -11%
6
UK ES: -12% -13%
5
Italy
4 IT: -17% -12%
Spain
3 Poland
PL: -3% -9%
2 Netherlands
1 NL: -3% +6%
Ireland
0
9-Mar 23-Mar 6-Apr 20-Apr 4-May IE: -11% -5%
Week commencing
Data excludes self-generation and embedded renewables consumption
Sources: ENTSO-E, Aurora Energy Research 16European power demand has seen a slight recovery as
lockdown measures are eased
COVID-19 cases1 3,735 5,950 2,117
3,735 3,623
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
Italian demand Demand recovers Demand increases as
GB demand recovers as
increases slightly as significantly in France as Germany continues to
some workplaces reopen
lockdown eased restrictions are relaxed. open commerce sector
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) Data to 18th May 2) Data for 2018 calendar year w.c. 11 May w.c. 4 May
Sources: ENTSO-E, Eurostat, Aurora Energy Research 17Day-ahead prices decreased across much of continental
Europe, whilst Ireland and Spain saw an increase
Weekly average day-ahead power prices in 2020, Change in prices versus
EUR/MWh previous week:
50
w.c. 4 w.c. 11
May May
45
DE: +17% -11%
40
Poland FR: +29% -5%
35
30 UK UK: -5% 0%
Ireland
25 Italy ES: +33% +9%
Spain
20 Germany IT: +17% -9%
Netherlands
15 France PL: +7% -4%
10
NL: +7% -7%
5
9-Mar 23-Mar 6-Apr 20-Apr 4-May IE: -15% +13%
Week commencing
Sources: ENTSO-E, Aurora Energy Research CONFIDENTIAL: NOT FOR EXTERNAL DISTRIBUTION 18Germany has seen record number of negative prices in
2020, due to high wind in February and COVID effects
Cumulative number of 2015 2016 2017 2018 2019 2020 Lockdown
negative price hours,
#
220 1 2 1
200 Record high wind
generation in February
180 (20 TWh) leads to high
number of negative price
160 hours early on in the year
140
120
2
100
COVID-19 lockdown
80 further increases
negative price hours due
60 to lower demand in
40 sunny hours during the
day
20
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Calendar Week
Sources: Netztransparenz, ENTSOE, Aurora Energy Research CONFIDENTIAL: NOT FOR EXTERNAL DISTRIBUTION 19Germany: negative prices have been concentrated during
daytime in 2020, driven by lower demand
Negative price hours 2015 2016 2017 2018 2019 2020
(Jan-May average),
#
16
Daytime occurrence
15
of negative price
14 hours
13
12
11
10
9
8
7
6
5
4
3
2
1
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Hour of the day
Sources: Netztransparenz, ENTSOE, Aurora Energy Research CONFIDENTIAL: NOT FOR EXTERNAL DISTRIBUTION 20Aurora 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 May Jun Jul
COVID impacts on commodities and demand
▪ Group Meetings will explore sensitivitieson Group Meeting
GB DE FR Iberia GB
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 21You can also read
