Last week, Nordic power prices rose to match the chronically high continental ones, averaging €400/MWh over three days. Norway’s energy regulator NVE said there was no risk of power rationing this winter, but Finland is bracing for rolling blackouts following persistent technical problems at its new Oikiluoto 3 nuclear reactor.
This week, Dutch TTF gas prices have, unusually, fallen below the Asian LNG spot price, as European temperatures rise and Asian ones fall. In Brussels, EU energy ministers debated a price cap on natural gas. Agreement was reached over a cap on the price allowed for TTF front-month trades, to be triggered when the TTF exceeds €180/MWh for three days, applicable from 15 February 2023. A draft document envisioned the cap being set at €35/MWh above a reference LNG price, a design meant to ensure that Europe remains a competitive buyer on the global LNG market. Nordic and Continental baseload prices have fallen to below €200/MWh as the TTF inches downwards more gradually.
In the week ahead, we will be watching carbon prices as the effects of both the anticipated gas price cap and the newly-agreed reform of the EU ETS act to push prices most likely upwards.