Fading supply risk led to increased price convergence month on month within the centralwest Europe (CWE) region under the day-ahead flow-based market coupling (FBMC) model in March.
In the process the Netherlands switched from largely being a net exporter in February to mostly being a net importer in March, leaving Germany the largest net exporter for most of the month.
Looking ahead, France may challenge Germany as primary net exporter in April as the country puts the winter’s nuclear woes behind it.
Price spreads to Germany were far tighter in March when compared to February. Improving margins in France and Belgium weakened their premiums to Germany. Meanwhile higher renewables output in Germany resulted in the market trading back below the Netherlands in March. Overall the most significant price changes occurred in Belgium with the premium peaking at €10.76/MWh, an 82% drop month on month according to Joint Allocation Office (JAO) data.
For France, the relative downward pressure on prices was driven by above-average temperatures and more stable nuclear availability. However relatively weak hydropower stocks remained an upside risk. Belgium also recorded rising temperatures but also higher inbound flows as margins eased elsewhere and nuclear availability remained restricted.
German fundamental data showed that thermal output was largely unchanged month on month but overall renewables output was boosted by higher solar output offsetting lower wind. Mild temperatures also played a part and this combination of factors drove German prices down relative to the Dutch market.
The fundamental shift across the FBMC markets led to Germany’s price discount in general tightening throughout the month. The smallest values occurred during the final two weeks of March with France, the Netherlands and even Belgium recorded small discounts to Germany. Daily average auction prices from JAO showed that all three countries traded at a discount to Germany. Data from German grid operators showed this coincided with one of the lowest levels of German wind for the month with just 7.5GW average output, 39% below the March average.
Dutch net flows reverse
The Netherlands switched from being a net exporter to being a net importer for the first time in six months in March, leaving Germany as the sole net exporter.
The change was driven primarily by a surge in imports from Germany, with average hourly flows around six times higher at 1.2GW/hour, and to a lesser extent a decline in exports to Belgium, which were around a quarter of the previous month’s at 0.4GW/hour. Strong renewables generation galvanised Germany’s exports. Despite the switch the Netherlands was not a net importer consistently throughout March according to daily JAO data. However this was restricted to only six days of the month, usually when German wind was relatively low.
A new exporter?
France recorded a seven-month low in net imports in March, with average hourly flows at 0.7GW/hour. Average daily flow data shows net flows largely directed outbound during the second half of the month having fluctuated in the initial weeks. Furthermore confidence in French margins is at its highest for some time with the nuclear concerns of last winter dissipating and demand forced down as temperatures creep above seasonal norms.
This puts France in a strong position to return to being a net exporter in April for the first time since July. However it is unlikely to be the biggest net exporter with German nuclear availability and solar output to improve over the coming weeks. firstname.lastname@example.org