Energy Market Risk Analysis | mid August 2012

Belgian nuke cracks, oil spur gains

The discovery of cracks in the reactor tub of a nuclear plant in Belgium triggered fears of several similar plants across Europe being closed down for safety reviews, helping to push power prices across the continent higher. A surge in oil prices also contributed.

Belgian month-ahead power prices rose by almost 10% and year-ahead prices by 5% on news of the cracks being found at the 1000 MW Doel-3 plant in Belgium. There are 8 other active plants with reactor tubs built by the same manufacturer as Doel-3 in Europe (in Holland, Spain, Switzerland and Sweden, as well as Belgium) and 10 in the US.

 

More gains despite demand drop

Despite consumption levels reaching long-term lows – LDZ demand (businesses and domestic users) falling to at least a ten-year low and demand from gas-fired power stations dropping to a five-year low, according to reports, Day-ahead prices climbed as high as 56 p/th, buoyed by low Norwegian flows (partly due to the start of maintenance at the key Kollsnes gas terminal) and a drop in imports through the Holland-UK (BBL) interconnector.

However prices tumbled sharply in mid-August as flows from the UK and Norwegian offshore were better than expected (in part because the intensity of the  Kollsnes maintenance was reduced) and the amount of LNG entering the national network increased.

 

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Energy price shift between 02 August 2012 and 19 August 2012

Elec: +4.04%

Gas: +3.96%

Coal: +0.1%

Oil: +8.47%
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