Hungarian Day-ahead trades at €120.00/MWh on heat wave

03 August 2017 18:10 Source:ICIS

Hungarian electricity spot prices reached new highs on Thursday, boosted by soaring summer temperatures, regional outages and low hydro.

Prices should calm down in week 32, with extreme spikes unlikely, traders said.

The Hungarian Day-ahead Baseload contract for delivery Friday was assessed at €91.50/MWh, although trades as high as €120.00/MWh were reported after the ICIS close, pointing to a panic on the market.

Although higher prices were recorded last winter, the day-ahead was the most expensive one recorded in the third quarter since 2011, according to ICIS assessments.

The counterpart products on Hungarian exchange HUPX and Romanian exchange OPCOM rise to €97.72/MWh. Prices on other regional exchanges also spiked.

A perfect storm of bullish factors seemed to be behind the spikes, with poor power plant availability coming together with high weather-driven consumption, an Italian NORD day-ahead price of €117.55/MWh, low Romanian wind and continuing weak hydro levels in the Balkans.

Temperatures of up to 8°C above seasonal average have swept the region in recent days, causing problems at ageing coal plants. Kosovo is reportedly struggling with lignite excavation.

Nuclear capacity has also been affected with Hungarian Paks and Romanian Cernavoda plants running with slightly reduced capacity. Separately, one of the 500MW Paks units is currently in planned maintenance.

An unplanned outage at 500MW unit at Slovak Bohunice nuclear plant was extended several times throughout the week but it was expected to end on Friday morning.

Week 32 outlook

The Hungarian front week was quite volatile on Thursday, posting intra-day ups and downs. ICIS assessed the contract at €62.00/MWh at market close.

The overall expectation was that prices should deliver lower than in week 31.

“The whole thing should be over in the front week,” said one trader. “The heat waves are ending, rain is coming, that’s why the front end of the curve is not reacting.”

However, traders seemed to be looking at different weather models. A second one expected cooler temperatures during the weekend but dry and hot weather during the working days, although not as hot as in week 31. He said spot could deliver above €62.00/MWh.

A third one said the spikes were only temporary but it was hard to predict next week’s delivery at this stage.

Regional temperatures should remain up to 8°C above average until 8 August, according to forecaster WSI.

Hydro concern

Traders expressed concern over the low hydro levels in the Balkans this year which could prove a bullish driver for the Hungarian front month and front quarter if there is no significant improvement in the coming weeks.

. “The Balkan hydro situation is a disaster,” the second trader said.

The Hungarian September ‘17 posted modest gains on Thursday, closing at €51.675/MWh. The contract was considered to be quite high already.

“I don’t expect a crazy September but I don’t see delivery below €50.00/MWh,” the trader added.

Power plant maintenance creates further upside risk. A 340MW unit at Serbia’s Nikola Tesla coal-fired complex is going into planned maintenance on 15 August which will last for a month.

The ongoing Paks outage is scheduled to continue until 28 September. Bulgaria’s 1GW Kodloduy nuclear unit will be offline between 16 September and 29 October. Greek power plant availability will be tighter as well.;

By Ellie Chambers