London — The German spot power price settled at Eur59.48/MWh (base) and Eur64.83/MWh (peak) on EPEX, the highest since December 2017, on extremely hot weather and low wind generation.
Spot prices have now climbed for the seventh consecutive week, and traders don't see the potential for a reversal in the immediate future.
"I see the market easing only from week 33 onward -- if anything", a trader said. "If it stays dry and wind isn't going to pick up, then September could become bullish as well."
"Next week should be the peak for temperatures. There is more wind currently forecast. However whether this will materialize remains uncertain," he added.
German weather forecaster DWD said Wednesday in its latest update that on next Tuesday and Wednesday temperatures will be 32-37 degrees Celsius in most of Germany, with the exception of the north which will be 30 C.
From Thursday of next week there will be a slight drop in temperatures with rain and thunderstorms in parts of the country.
Several hard coal plants cut production due to "external factors" and, despite the 1.4 GW Isar-2 reactor coming back online, overall availability is tight. Between Friday and Tuesday, EEX Transparency data shows a fall in hard coal availability below 9 GW from the weekend onward.
Power prices averaged Eur49.54/MWh in July. Last July day-ahead power averaged Eur33/MWh, almost Eur17/MWh below current levels, EPEX data showed.
The heat wave has increased demand at a time of low wind generation and nuclear plants in France and Germany limited production due to the warming of rivers from which they take cooling water.
Germany, France, Netherlands and Belgium settled at similar levels for a third session this week.
"Markets tend to couple in times of low wind generation and when the price-setting plants have similar price levels because of the order of merit in the markets concerned. This is the case in recent days because the price is often determined by gas-fired plants or the more expensive coal plants," the trader said.
