September 13, 2012 / 9:46 AM / 5 years ago

NORDIC POWER-Spot price to fall sharply on hydro inflows, wind

* Spot price for Friday seen falling below 20 euros/MWh
    * Water reservoirs in Norway to be filled over 90 pct

    OSLO, Sept 13 (Reuters) - Nordic spot electricity prices
were expected to fall sharply on Thursday as the market came
under pressure from strong hydro inflows and higher wind output,
analysts said.
    The Nordic average day-ahead power price for
Friday delivery was expected to fall to 19.7 euros a
megawatt-hour (MWh) from 25.1 euros a day earlier, analysts at
Thomson Reuters Point Carbon said.
    "Pressure on hydro producers is increasing: water reservoirs
in Norway are expected to be filled up to 91.4 percent and in
Sweden to 88 percent," a Point Carbon analyst said.
    "There is also heavy precipitation expected on Friday," he
added.
    Meteorologists said strong Atlantic lows will dominate the
Scandinavian weather in the next days, with wet and windy
conditions.
    The Nordic region relies on hydroelectric power for more
than 50 percent of its power generation. More rain boosts hydro
power capacity, pushing down prices.
    The precipitation levels for the next 15 days were expected
to remain 6 terawatt-hours (TWh) above normal, the latest
outlook from the European centre for medium-range forecasts
showed.
    Combined wind power output in Denmark and Sweden was
forecast to rise by an hourly average of 3,250 MW to 4,200 MW on
Friday.
    Export capacity from Denmark to Germany is to remain
restricted to 150 MW until tomorrow afternoon.
    The day-ahead contract was quoted on the financial market in
a bid-ask spread of 19.75 euros and 20.75 euros.
    
    FORWARD PRICES
    Nordic forward power prices were broadly unchanged from
Wednesday, as fuel markets steadied ahead of a U.S. Federal
Reserve policy decision that is expected to include further
stimulus action to bolster the world's largest economy.
    The benchmark front-quarter contract for baseload
(24 hours) delivery was up by 5 cents to 36.35 euros a MWh by
0900 GMT.
    "There's still enough water in the system," an Oslo-based
trader said.
    "Everybody is waiting for the spot price to come and what
the Fed is going to say," he added.
    At the far end of the curve, the Nordic contract for
baseload power delivery next year was down by 5 cents
to 37.55 euros a MWh.
    The fall was in line with benchmark German power prices for
baseload delivery in 2013, which fell to 48.60 euros per MWh,
their lowest level since early August.
    The drops are in line with declines in September of 2009,
2010 and 2011. 
    API2 coal swaps for 2013 were down by 5 cents
to $98.75 a tonne, while European carbon prices were
steady at 7.92 euros a tonne.    

 (Reporting by Nerijus Adomaitis; Additional reporting by
Henning Gloystein in London; Editing by Andrew Heavens)

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