German power market takes over as largest net exporter

Forecasts of high wind power generation and mild temperatures will improve the chances of Germany remaining the primary net exporter across Europe’s largest energy markets in February.

For the first few days of the month hourly wind generation has frequently been close to 20GW, typically high for Germany, and forecasts suggest availability will remain strong for most of February. Temperatures are also predicted to be above seasonal norms.

Elsewhere, evidence suggests a return to warm temperatures across Europe with another cold snap looking increasingly unlikely. This should limit the need for electricity imports across several countries. The exception is Switzerland where weak hydro reserves continue to keep the system tight.

Supply squeeze hits French exports

Germany took over from France as the main net exporter in January as German supply margins improved while France’s deteriorated. German outbound flows increased 2.5% to 8.3GW/hour, marking the first time in nine months that the country’s exports were significantly higher than France’s. Strong wind generation and relatively mild weather boosted supply margins.

All of the monthly increases in exports were confined to Germany’s eastern borders – a pattern that has now been observed for three consecutive months. Exports to Poland were particularly strong with freezing temperatures boosting demand while supply disruptions were caused by the cold weather conditions triggering cooling issues at Poland’s main power plants, forcing them into unplanned outages.

Similarly the Czech Republic was suffering from prolonged outages to 1GW of nuclear capacity and Austria was faced with interconnector restrictions along its border with Hungary. This led to an uptick in German flows to Austria and Czech Republic where net exports were flat month on month.

While Germany’s net exports increased, France’s receded by 23% to 6.2GW/hour. Weak hydroelectricity stocks, erratic wind output and colder temperatures increased the strain on the French grid. Elsewhere high hydropower in Spain has reduced the need for French imports.

The French power system was at its tightest mid-month when low renewables, cold weather and industrial action across operations at incumbent EDF triggered a price spike across the centralwest Europe region on 20 January. Subsequently the French Day-ahead Peaks hit a three-year high of €80.00/MWh as the supply squeeze took effect.

High Swiss prices kills exports

Italy continued to record declines in inbound flows with net imports dropping 10% to 5.3GW/hour, the first time back-to-back monthly declines have been observed since May. Mild temperatures and falling fuel costs kept power margins fairly comfortable.

Imports from Switzerland recorded the largest drop as the spread between Swiss and Italian prices fell. Italian prices largely softened on weak gas while in Switzerland low hydroelectricity stocks and restricted nuclear capacity supported prices. This pattern is likely to continue in the short term with hydro reserves yet to recover from lows which means Switzerland will have to rely more on relatively expensive gas-fired generation. christopher.rene@icis.com