Heatwave drives CEE spot power contracts to year-highs

Polish spot power contracts continued to set record highs in week 25 thanks to a heatwave that raised air conditioning demand and low wind generation.

The day ahead contract on the Polish Power Exchange (TGE) rose almost 10% to Zloty 397.70/MWh (Eur88.09/MWh) on June 24, up from Zloty 362.05/MWh on June 17.

On June 23, the spot price closed at Zloty 411.72/MWh, with temperatures exceeding 30 degrees Celsius across the country, but it fell back on June 24 thanks to a forecast fall in temperatures on June 25.

Average temperatures in Warsaw were as much as seven degrees above normal during the week, according to CustomWeather. Temperatures are forecast to rise again in week 26, up to eight degrees above the norm.

Wind production was below 0.5 GW and solar PV output, despite the heatwave, rarely surpassed 2 GW, for much of the week.

Power demand on June 23 was up 10% year on year with maximum load reaching 23.76 GW, not far off the summer record of 24.10 GW set in June 2019, according to system operator PSE.

Rising prices in neighboring markets saw some Polish exports to Sweden and Lithuania during the week.

A forecast of warmer weather in week 26 contributed to a 4% week on week rise in the July contract to Zloty 351.18/MWh on June 24.

Looking further ahead, the Cal-22 contract rose 3.2% week on week to Zloty 352.70/MWh on June 24, with carbon prices climbing above Eur55/mt for the first time since mid-May.

The average price of green certificates, used to support existing renewable energy installations, rose 4.1% to Zloty 165.57/MWh on June 24, with lower volumes traded as generators had bought in previous weeks to cover their 2020 obligations.

Czech peak breaches Eur105/MWh

Czech spot prices on the OTE market rose for a fifth session in a row June 24 in a week of stormy disruption for the power sector. Baseload contracts rose 1.02% to a year to date record of Eur97.07/MWh, peak contracts were 3.18% higher at Eur105.90/MWh, with offpeak prices slipping 1.45% to Eur88.25/MWh.

Futures on Prague's Power Exchange Central Europe (PXE) also hit new year highs, front month contracts June 23 up to Eur83.13/MWh have been rangebound between Eur74/MWh and Eur76/MWh a week earlier.

August base advanced more modestly to Eur79.74/MWh from Eur77.38/MWh, while Q3 bounced back after mid-June losses, firming to Eur81.29/MWh from Eur78.87/MWh. The premium for Q4 narrowed with a smaller gain for the final quarter to Eur83.53/MWh from Eur82.12/MWh. Further out, Cal-23 hit a year to date high of Eur71.68/MWh June 24.

Latest figures from grid operator CEPS for the week ending June 14 showed demand of 1.26 TWh, 6.4% up YoY. Damage to CEPS' high voltage grid due to storms June 24 forced CEZ to bring forward by a week a scheduled outage for its Temelin-2 nuclear power plant. The original outage was due to start July 2.

Hungarian peak nears 7 GW

Hungarian day-ahead power prices soared to near all-time highs in weeks 24-25 to June 25 as a heatwave brought record-high temperatures and power demand.

Day-ahead base on the HUPX exchange rose only slightly in week 24 to surpass Eur80/MWh, but jumped in week 25 to breach the Eur100/MWh mark, ending the week at a four-and-a-half-year high Eur108.5/MWh. The difference to German spot prices was minimal, but opened up to almost Eur20/MWh late in week 25 when Hungarian prices took off.

The hike was due to a strong heatwave in week 25 that saw temperatures rise by an average six degrees over the previous week, hitting record highs (for June) across the country.

Peak system load soared, climbing to an all-time summer high of 6.81 GW on June 23.

On the supply side, local large power plants and solar power were able to meet the initial small rise in demand in week 24, although some issues posed potential upward pressure on prices, including the absence of the 433-MW Gonyu CCGT and a complete lack of wind output.

The jump in power demand in week 25, however, was met entirely by net imports, which grew by an estimated more than 50% week on week to a four-month high.

Futures prices on the HUDEX exchange also increased significantly, especially in week 25, a trend also shaped by the ongoing near-complete reopening of the country's service sector, including tourism.

Month-ahead base increased by almost Eur10/MWh to reach Eur91.5/MWh by the end of the period. The gap to German month-ahead prices gradually widened from below Eur9/MWh to more than Eur10/MWh. Quarter-ahead base charted a very similar course, closing at Eur90.5/MWh.

Year-ahead base was little changed early on at around Eur70-71/MWh, but later took a sharp upward turn to close at Eur74.4/MWh. The gap above German Cal-22 quotes increased compared with the first half of June, averaging just above Eur4.5/MWh.