Monthly Price Brief - A Review of European Gas and Power Price Trends: January 2008

SUMMARY

Overview

Introduction

The growing role of wholesale traded energy markets across Europe creates a greater need for players throughout the value chain to be aware of the latest market movements and developments. From the wellhead or power station gate to the end-user, volatility in the spot and forward price of power and gas is creating an increasingly challenging environment for all market participants.

TABLE OF CONTENTS

• DATAMONITOR VIEW
  • CATALYST
  • SUMMARY
• ANALYSIS
  • Competition is a key factor in delivering lower household bills
    • Despite recent power price increases, the UK is Europe's second cheapest supplier, behind France
    • In Europe, year ahead wholesale power prices provide a benchmark driver
    • The UK heads the list of cheap European gas suppliers
    • The NBP year ahead contract slipped below TTF contracts
    • SSE leads the UK's major power suppliers on price
    • SSE offers the cheapest residential gas supplies in the UK
    • European power markets stayed bullish as 2007 ended on a high
    • In Belgium, month ahead contracts rose due to tighter conditions
    • In France, all contracts except month ahead appear to have peaked
    • In Germany, prices at the near-end of the forward curve spiked in December
    • In the Netherlands, month ahead contracts rose significantly
    • UK power prices showed few signs of softening in December
    • Gas prices showed bullish persistence, edging higher across Europe
    • At the NBP, quarter ahead prices softened in December
    • TTF displayed resilience as most contract prices continued to firm
    • Zeebrugge, like the NBP, saw quarter ahead prices softenTTF displayed resilience as most contract prices continued to firm
• APPENDIX
  • This brief builds upon Datamonitor's extensive pricing proposition
  • Glossary
    • This brief contains a number of industry standard terms
  • Our analysis builds on other sources to provide greater insight
    • Further Reading
    • Extended Methodology
  • We assess the profitability of fossil fuel plants across northwest Europe
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  • Ask the analyst
  • Datamonitor consulting
  • Disclaimer
  • List of Figures
    • Figure 1: When compared to its European counterparts, the UK's domestic power bills are the second cheapest, behind France
    • Figure 2: Wholesale year ahead prices in Europe are a key element of suppliers' energy portfolios
    • Figure 3: The UK's maturing retail supply market benefits from low prices, which places it ahead of the EU's major energy suppliers
    • Figure 4: Since the end of 2005, prices at the NBP have been consistently lower than at the TTF, the Netherlands's main gas exchange
    • Figure 5: Scottish and Southern Energy and EBICo offer the cheapest bills in the UK residential power market
    • Figure 6: SSE is able to keep its household gas bills on hold as its main rivals are priced at a premium to the firm's standard product
    • Figure 7: European power markets stayed bullish as 2007 ended on a high
    • Figure 8: In Belgium, month ahead contract prices continued to be bullish during December 2007
    • Figure 9: Month ahead contracts continued to accelerate upwards, in contrast to the year and quarter ahead contracts
    • Figure 10: Prices at the near-end of the forward curve increased, as consistently colder temperatures challenged capacity
    • Figure 11: With the exception of quarter ahead contracts, baseload prices rose in response to short-term demands in the Dutch power market
    • Figure 12: Although all contracts were bullish, the month ahead contract made the most significant gains on the close of December trade
    • Figure 13: Gas prices showed bullish persistence, edging higher across Europe
    • Figure 14: Despite bullish month and day ahead contracts, gas prices softened on quarterly deliveries
    • Figure 15: Although quarter ahead prices fell, this was the exception, as day and month ahead contracts continued to firm
    • Figure 16: Apart from the quarter ahead product, Belgian gas prices have shown a gradual upward climb, much like the rest of Europe
    • Figure 17: Energy pricing proposition
    • Figure 18: Generation spread methodology