UPDATED: Nuclear uncertainty to drive Belgian OTC power liquidity

LONDON (ICIS)–High Belgian over-the-counter (OTC) power volume could continue all year, due to nuclear uncertainty engulfing the country’s power market.

Liquidity doubled year on year in May and June as prices underwent a bull run amid lagging nuclear availability and a bullish fuels complex.

Outlook

Prices and volume surged on Thursday after Belgian nuclear operator ENGIE Electrabel confirmed it had discovered anomalies in the reinforced concrete ceiling of the 1GW Tihange 3 nuclear reactor during maintenance that has been ongoing since late March.

Tihange 3 is one of seven operating reactors in the country. The four reactors at Doel, amounting to 2.9GW in capacity, as well as the 960MW Tihange 1 unit, were constructed with a different architecture.

A Tihange Nuclear Power Plant spokesman confirmed that the 1GW Tihange 2 unit was built to the same design as Tihange 3, and will be checked for the same issue when it goes off line for planned maintenance in August.

“Tihange 2 and 3 have a much more solid construction than other plants in the world,” he said. “Bunker safety systems are an additional layer of protection.”

The affected Tihange 3 unit is still set to return to the grid at the end of September, although the discovery will bring to mind the nuclear uncertainty that characterised 2016 and 2017 in France, when nuclear outages were repeatedly extended. Belgian Q4 ‘18 prices increased by nearly 3.5% session on session on Thursday according to ICIS trade data, and Q1 ‘19 more than 1.5%.

In the event that additional checks do not result in outage extensions at the two Tihange units, schedules on the ENGIE transparency website indicate that Belgian nuclear availability will return to average levels in the fourth quarter of the year after reaching a three-year low in the current quarter. Traders in Belgium and surrounding markets will be keeping a close eye on these return dates, with the extra attention meaning that the high volumes seen in the previous quarter are likely to continue.

High traded volume

On 2 May, surging front-year volume drove daily liquidity to 1.4TWh, the highest level since 12 December 2014. Some participants may have taken the opportunity to hedge against further price gains, as the contract ultimately climbed from below €40.00/MWh in the first quarter of the year towards €50.00/MWh more recently.

A raft of nuclear outage extensions announced by ENGIE Electrabel on 18 June drove up prices and helped liquidity exceed last year’s daily average of 194GWh on seven of the final nine sessions of the month. Front-quarter volume quadrupled year on year across the month as a whole, reaching 1.8TWh as participants struggled to secure supply to cover their delivery obligations amid the tight outlook.