Monthly Price Brief - A Review of European Gas and Power Price Trends: January 2008

The growing role of wholesale traded energy markets across Europe creates a greater need for players throughout the value chain to be aware of the latest market movements and developments. From the wellhead or power station gate to the end-user, volatility in the spot and forward price of power and gas is creating an increasingly challenging environment for all market participants.



Report Highlights
Competition is a key factor in delivering lower household bills. European power markets stayed bullish as 2007 ended on a high. Gas prices showed bullish persistence, edging higher across Europe.


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DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
ANALYSIS 2
Competition is a key factor in delivering lower household bills 2
Despite recent power price increases, the UK is Europe's second cheapest supplier, behind France 3
In Europe, year ahead wholesale power prices provide a benchmark driver 4
The UK heads the list of cheap European gas suppliers 5
The NBP year ahead contract slipped below TTF contracts 6
SSE leads the UK's major power suppliers on price 7
SSE offers the cheapest residential gas supplies in the UK 8
European power markets stayed bullish as 2007 ended on a high 9
In Belgium, month ahead contracts rose due to tighter conditions 10
In France, all contracts except month ahead appear to have peaked 11
In Germany, prices at the near-end of the forward curve spiked in December 12
In the Netherlands, month ahead contracts rose significantly 13
UK power prices showed few signs of softening in December 14
Gas prices showed bullish persistence, edging higher across Europe 15
At the NBP, quarter ahead prices softened in December 16
TTF displayed resilience as most contract prices continued to firm 17
Zeebrugge, like the NBP, saw quarter ahead prices softenTTF displayed resilience as most contract prices continued to firm 18
APPENDIX 18
This brief builds upon Datamonitor's extensive pricing proposition 19
Glossary 20
This brief contains a number of industry standard terms 20
Our analysis builds on other sources to provide greater insight 22
Further Reading 22
Extended Methodology 22
We assess the profitability of fossil fuel plants across northwest Europe 22
Our bespoke services can be tailored to your specific needs 23
Ask the analyst 23
Datamonitor consulting 23
Disclaimer 23

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Figure 1: When compared to its European counterparts, the UK's domestic power bills are the second cheapest, behind France 3
Figure 2: Wholesale year ahead prices in Europe are a key element of suppliers' energy portfolios 4
Figure 3: The UK's maturing retail supply market benefits from low prices, which places it ahead of the EU's major energy suppliers 5
Figure 4: Since the end of 2005, prices at the NBP have been consistently lower than at the TTF, the Netherlands's main gas exchange 6
Figure 5: Scottish and Southern Energy and EBICo offer the cheapest bills in the UK residential power market 7
Figure 6: SSE is able to keep its household gas bills on hold as its main rivals are priced at a premium to the firm's standard product 8
Figure 7: European power markets stayed bullish as 2007 ended on a high 9
Figure 8: In Belgium, month ahead contract prices continued to be bullish during December 2007 10
Figure 9: Month ahead contracts continued to accelerate upwards, in contrast to the year and quarter ahead contracts 11
Figure 10: Prices at the near-end of the forward curve increased, as consistently colder temperatures challenged capacity 12
Figure 11: With the exception of quarter ahead contracts, baseload prices rose in response to short-term demands in the Dutch power market 13
Figure 12: Although all contracts were bullish, the month ahead contract made the most significant gains on the close of December trade 14
Figure 13: Gas prices showed bullish persistence, edging higher across Europe 15
Figure 14: Despite bullish month and day ahead contracts, gas prices softened on quarterly deliveries 16
Figure 15: Although quarter ahead prices fell, this was the exception, as day and month ahead contracts continued to firm 17
Figure 16: Apart from the quarter ahead product, Belgian gas prices have shown a gradual upward climb, much like the rest of Europe 18
Figure 17: Energy pricing proposition 19
Figure 18: Generation spread methodology 22

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