Nordic power contracts fell on Tuesday in response to a strengthening hydrological surplus, set to hit its strongest point since January with more wet weather on the way, and also on weak spot prices.
The May contract was last seen down EUR 0.54 at EUR 27.45/MWh, while the Q3 contract was EUR 0.55 lower at EUR 26/MWh.
“The weather outlook has turned wetter over the Easter holiday and the hydrological surplus will force hydropower producers to increase their output ahead of the snowmelting period,”Hermund Ulstein, portfolio manager at Volue Market Services
The hydrological balance – a measure of energy stored in snow, soil and reservoirs – was set to exceed 15 TWh above normal for the first time since 26 January later this week, said Montel’s Energy Quantified (EQ), noting the surplus had risen sharply from 2.4 TWh on 20 February.
Different weather forecasts predicted precipitation that could provide 5.3-8.1 TWh of hydropower output during the next 10 days, well above the seasonal norm of 4.3 TWh, according to EQ.
Meanwhile, temperatures were set to average 1.2-2.1C below the norm over the period.
Market sentiment had also been affected by weak spot prices over Easter – with all Nordic countries bar Norway seeing negative hourly prices on Monday amid high wind power output.
“It was a surprisingly weak start of April, especially on Monday with a system price average of EUR 5.77/MWh,”Sigbjørn Seland, analyst at StormGeo.
Montel’s AI forecast predicted a system price of EUR 34.17/MWh on Wednesday, compared to the current settlement of EUR 27.88/MWh.
Nordic wind power output was set to drop from 12.6 GW currently, to 8.5 GW on Wednesday, while average consumption was predicted to stay around 50 GWh, which was 3 GWh above the norm, EQ said.
Meanwhile, losses on the curve were partly offset by a strong German power market, where the May contract hit a fresh high of EUR 49.80/MWh earlier at one broker, which corresponds to a EUR 22.40 premium to the Nordic equivalent.
The strong German market only had a limited impact, however, due to the Nordic hydrological surplus, said Ulstein.