Impact of Coronavirus on European energy markets - Weekly tracker for 6th May 2020 - Aurora ...
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Impact of Coronavirus on European energy markets
Weekly tracker for 6th May 2020
© 2018 Aurora Energy Research Limited. All rights reserved.
06/05/2020
Executive Summary
Update for week ending 3rd May:1
▪ The number of new reported COVID-19 cases has slowed down across Europe, although UK and Spain
are still experiencing high numbers of COVID cases and deaths. Lockdown measures are being eased
across many European countries during May.
▪ Crude oil futures increased due to production cuts and the anticipated recovery in consumption.
▪ NBP Gas futures decreased further across the curve over the past week. NW European gas
consumption in April 2020 was 17% down year on year, whilst storage inventories remain high.
▪ EUA Carbon prices declined by around 10% over the past fortnight, to just below €20/tonne.
▪ Power demand remains weak relative to the same period last year, with a bigger decline in Germany.
▪ Power prices rebounded in UK, Germany and Ireland, but fell further in Poland, Italy and Spain. Dutch
power prices went negative for 13 hours on Easter Sunday – the longest such period in history.
▪ Dutch power sector carbon emissions are forecast to be 25% lower in 2020 as a result of COVID,
bringing the Netherlands closer to the Urgenda target (25% reduction vs 1990 levels). The cumulative
carbon emissions reduction as a result of COVID could be 18-43MTCO2e over the period 2020-25,
depending on the scale of economic downturn in the EU and globally.
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
We are pleased to offer a reduced rate for Aurora subscribers
In addition, we offer bespoke services, including portfolio stress testing, transaction support and board briefings
For more information, please contact Client Support clientsupport@auroraer.com
To pre-order, please use the form on our web page +49 (0) 30 120 84969 | +44 (0) 7741 9090784Contents
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 Dutch power market
5Slowdown in new COVID cases in Italy, Germany and
France, but many cases still in Spain and the UK
Total cases per 1 million population12 Total number of reported cases12
10,000,000
Spain 5,285 EU-27 + UK
Spain
1,000,000
Ireland 4,355 Italy
UK
Italy 3,485 100,000 Germany
France
UK 2,749 Netherlands
10,000
Ireland
France 2,584 Poland
1,000
Netherlands 2,368
100
EU27+UK 2,310
Germany 1,977 10
Poland 362
1
2nd 23rd 13th 4th
March March April May
1. Chart is in log scale. 2. Data to 4th May
Sources: EDCD, Worldometer 6Slow decrease in the number of daily COVID deaths and
new infections continues across Europe
Daily increase in reported cases12 Daily increase in COVID-related deaths12
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 22nd 12th 3rd 1st 22nd 12th 3rd
March March April May March March April May
Spain Germany UK Ireland EU-27 + UK
Italy France Netherlands Poland
1. Chart is in log scale. Rolling 7 day average. 2. Data to 4th May
Sources: EDCD 7COVID restrictions remain strict, but many countries are
looking to ease these in coming weeks
COVID stringency Index, Country Changes to restrictions
Index (0-100)
France Schools reopen on 11th/18th May;
0 20 40 60 80 100 some shops & public amenities open
from 11th May
France
Germany Small shops reopened from 20th April;
Germany some schools reopened 4th May
Ireland Extended lockdown to 18th May,
Ireland thereafter some shops can reopen
Italy Some shops & factories reopened from
Italy
4th May; schools closed until Sept
Netherlands Netherlands Primary schools reopen on 11th May;
bars/restaurants closed until 20th May
Poland Poland Retail & leisure premises to reopened
on 4th May; schools reopen 24th May
Spain
Spain Open air bars & restaurants to operate
UK at low capacity from 11th May; schools
closed until Sept
UK Lockdown extended to 7th May; plan
1st March 1st April 1st May for easing restrictions to be announced
on 10th 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
4. Deep dive on Dutch power market
9Front-month futures slid on storage concerns, whilst near-
term futures turned positive as production is cut
Prompt crude oil futures1, Crude oil futures,
$/bbl $/bbl
Front-month WTI and Brent on 4
60 May were on the back foot as 60
traders shun taking physical
50 55
deliveries in June due to a
shortage of storages… 50
40
45
30
40
20 35
10 30
0 25 …but Brent and WTI futures
20 increase with traders betting on
-10 rising consumption as lockdowns
15 ease and most crude producers
-20
10 (OPEC+, U.S. and Norway) have
-30 pledged to cut oil production
5
-40 0
2nd 16th 30th 14th 27th Jan-20 Jan-21 Jan-22 Jan-23 Jan-24 Jan-25
March March March April April
WTI Brent 20/04/2020 27/04/2020 04/05/2020
Sources: Aurora Energy Research EOS, Reuters 10NBP futures went down 4% compared to the previous
week on continued oversupply expectation
Average monthly Average monthly
NBP gas futures,1 NBP gas futures,
pence / therm €/MWh
65 25
60 ▪ NBP futures have dropped
55 to 35p/therm (a decrease
20 of 1.3 p/therm week-on-
50 week) on average between
45 2020 and 2025 as
40 15 continued demand
35 destruction and high
storage inventories
30 weighed down on prices
25 10 across the curve
20
▪ Despite Norway’s
15
5 announcement to pull back
10 its oil production, its plan
5 excludes any adjustment
0 0 to gas production, putting
Jan-20 Jan-21 Jan-22 Jan-23 Jan-24 Jan-25 further downward
pressures on futures
04/05/2020 06/04/2020
27/04/2020 02/03/2020
Note: 1. Futures are a rolling 7 day average.
Sources: Aurora Energy Research, Reuters 11Monthly gas demand in April 2020 was down 17% year-
on-year, below the trailing 5 year average
Monthly NW Europe gas consumption, Daily NW Europe gas consumption,
bcm mcm
40 1,100
1,000
35
900
30 800
25 700
600
20
500
15 400
10 300
200
5
100
0 0
Apr- Jun- Aug- Oct- Dec- Feb- Apr- 1st 15th 29th 12th 26th
19 19 19 19 19 20 20 March March March April April
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 storages were 8 bcm higher in April
2020 than the previous year
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 22nd 12th 3rd
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 slide by around 10% over the last 2 weeks
due to continued weak demand
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
for EUA Aviation allowances
Lower Industrial demand: Factory closures due
-11% 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- 29-
Mar Mar Mar Mar Mar Apr Apr Apr Apr
Sources: Aurora Energy Research, Eikon 14Contents
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 Dutch power market
15European power demand remains low compared to pre-
COVID levels
Weekly sum of power demand in 2020, Change in demand versus
TWh same week last year:
Lockdown introduced
w.c. 20 w.c. 27
11 April April
10
DE: -3% -7%
9
Germany FR: -14% -16%
8
7 France UK: -15% -21%
6
ES: -13% -12%
5 UK
4 Italy IT: -5% -17%
Spain
3
Poland PL: -4% -3%
2 Netherlands
1 NL: -25% -3%
Ireland
0
IE: -7% -9%
24-Feb 9-Mar 23-Mar 6-Apr 20-Apr 4-May
Week commencing
Data excludes self-generation and embedded renewables consumption
Sources: ENTSO-E, Aurora Energy Research 16Power demand remains weak across Europe as lockdown
continues
COVID-19 cases1 3,485 5,285 1,977
2,584 2,749
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 stays very similar Demand falls in Germany Demand remains low,
decreases as in Spain with continued with industry slow to due to persistent
uncertainty remains lockdown ramp up restrictions
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 4th May 2020 2) Data for 2018 calendar year w.c. 27 April w.c. 20 April
Sources: ENTSO-E, Eurostat, Aurora Energy Research 17Prices rebound in UK, Germany and Ireland, but fall
further in Poland, Italy and Spain
Weekly average day-ahead power prices in 2020, Change in prices versus
EUR/MWh previous week:
50
w.c. 20 w.c. 27
45 Apr April
40 DE: -34% +38%
35 Poland
FR: +17% +5%
30 UK
Ireland UK: -19% +22%
25
Italy ES: -22% -15%
20 Netherlands
Germany IT: +8% -28%
15
France
10 Spain PL: +19% -3%
5
NL: +1% +7%
0
9-Mar 23-Mar 6-Apr 20-Apr IE: -2% +6%
Week commencing
Sources: ENTSO-E, Aurora Energy Research 18Contents
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 Dutch power market
19Gas prices are low due to COVID-19 combined with a glut
of cheap gas; power demand has been lower than in 2019
Dutch monthly spot gas prices (TTF), Dutch daily average power demand, 2019
€/MWh GW 2020
40 15
Dutch spot gas
30 prices in March
2020 were 45% 10 -31%
lower than in
March 2019
20
5
10
0 0
Apr- Apr- Apr- 2 Mar 9 Mar 23 Mar 6 Apr 20 Apr 27 Apr
18 19 20
▪ Gas prices have been hit by a combination ▪ Power demand has strongly declined since
of high storage volumes, a mild winter and working from home policies and social
reduced demand due to COVID-19 distancing measures were put in place
Sources: Aurora EOS, ENTSO-e 20On Easter Monday, Dutch electricity prices were negative for
13 consecutive hours: the longest such period in history
Wholesale market prices,
Day ahead price 2019 weekly price
€/MWh
Average weekly price
80
60
40
20
0
-20
-40
-60
-80
2nd 9th 16th 23th 30th 6th 13th 20th 27th
Week commencing March April
▪ Weekly power prices have fallen throughout March and April 2020 due to low gas prices, falling demand and
renewable build-out. Average prices are almost half 2019 levels
▪ Electricity prices have become more volatile, reaching sub-zero levels for multiple hours per week. Negative
prices only occurred at three other instances over the past decade.
Sources: Aurora Energy Research, ENTSO-e 21Extract from Aurora’s Special report on the impact of COVID-19 on European power markets
Four economic recovery scenarios have been developed
to understand impact of COVID on power markets
COVID-19 impact scenarios
▪ To measure the impact of COVID 19 on the energy sector a combination of the different economic
scenarios was modelled, with several economic factors changing in each scenario
▪ As EU is our point of focus, the scenarios were built to measure the economic severity of the EU vs that
of the world
▪ 4 scenarios have been
EU Economic Severity investigated to cover
Mild Recession Severe Recession Depression the economic situation
spectrum that might
Rest of the World Mild Recession 1
arise due to COVID-19
Economic Severe Recession 2 3
Severity
pandemic
Depression 4
▪ 7 EU countries were
modelled
Factors
Lockdown Investments and
Demand Supply Commodity Prices
duration Financing
Sources: Aurora Energy Research 22The Dutch power sector will emit 25% less CO2 in 2020
and avoid up to 40 Mte by 2040
Mild recession worldwide Mild recession worldwide
Previous Aurora Central forecast Severe recession worldwide
Severe recession worldwide, EU depression
Depression worldwide
Forecast CO2 emissions, Cumulative avoided CO2 emissions,
Mte Mte
50 50
40 40
-25%
30 30
20 20
10 10
0 0
2020 2022 2024 2026 2028 2030 2020 2021 2022 2023 2024 2025
▪ The Dutch power sector will emit 25% less ▪ Cumulative avoided Dutch CO2 emissions are
CO2 in 2020 than it would have done under correlated with worldwide economic impact: the
harder the economic hit, the less CO2 is emitted –
normal circumstances
due to lower gas prices creating a coal to gas shift
▪ COVID-19 measures have brought the Dutch ▪ EU economic activity is the leading indicator for
government closer to meeting the Urgenda Dutch emissions, although worldwide activity does
target (25% reduction vs 1990 levels) have an effect
Sources: Aurora Energy Research 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
