European summer power prices could rise by as much as Eur5.00/MWh ($5.93/MWh) on average under an extended heatwave scenario, S&P Global Platts Analytics said in a press conference June 18.
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The effect of "double cooling" demand brought on by working-from-home as well as offices re-opening could coincide with reduced hydro and thermal plant efficiency in the event of a severe heatwave, Platts Analytics' head of European power analysis Glenn Rickson said.
"Under an extended heatwave scenario for Q3, taking into account an increase in cooling demand coupled with high levels of working from home, prices would rise by an average of Eur4-Eur5/MWh," Rickson said.
Much of this derived from a 5-GW boost to average EU10 gas generation versus Platts' Analytics' base case of 40 GW, he said.
Covid-related restrictions on holiday travel, meanwhile, could ease heatwave demand concerns in southern Europe.
Typically there was net migration from north to south within Europe during July and August, "but we don't see that to the same extent this year because of travel restrictions, translating to lower demand in the southern markets and higher demand in the north," Rickson said.
Nuclear, solar buffer
On the supply side and under more normal weather conditions, much improved French nuclear availability and booming solar additions in Germany and Spain implied a relatively comfortable Q3 outlook.
"French nuclear was extremely low last year, but this summer availability is a lot higher than is usually the case because maintenance has been pushed into the winter, while the current price signal is such that we've not see the level of turndown you might usually expect," Rickson said.
Having had a poor run to May on sub-normal wind speeds, European renewables' output had leapt ahead in a year on year comparison, driven by a significant uplift in solar capacity installation rates.
Germany had seen 500 MW/month solar additions so far this year, adding to its 54 GW end-2020 base, while Spain was forecast to add around 4 GW solar this year to its 12 GW base.
"We expect that growth to continue to the extent that Spain becomes a discount market in Europe," Rickson said.