Know your NEM: Europe’s changing energy profile

Putting Australia to one side we look at some figures from the Agora/Sandbag analysis of  Europe’s 2017 data. Of course, we are focused on the renewables side of things.

Across the Euro 28 countries, wind is 11% and solar PV 4% of consumption.

The numbers are held back, by and large, by Eastern Europe. Poland and the Czech republic remain coal dominated. About 14 GW of wind was installed and about 9 GW of PV in 2017. Selected countries in Fig 1 are by size of consumption, Germany largest.

Figure 1: Shae of consumption by fuel. Source: AGORA

Of the big consumers Germany has 18% wind and UK 14%. Italy is 8% PV, Germany 7% and Spain 5%.

Figure 2 Wind & PV shares in Europe by country. Source: AGORA

Wind prices dropped through the year but by Australian standards onshore wind prices are high! The table below is by country and then date (earliest first). I converted at today’s spot euro rate.

Figure 3: Wind auction prices Europe 2017. Source: Agora

By the end of the year PV prices were down towards $52 MWh in France.

Figure 4: Solar PPA prices. Source: AGORA

We’d note that not much PV was installed in Europe and that for both wind and PV the prices quoted are for contracts typically starting post 2017.

The weekly numbers in the NEM..

Another week of little note in the NEM. Demand is falling in its normal seasonal fashion. Gas and REC prices were steady or slightly soft.

Electricity futures are clearly below last year and continue to show a declining trend but not to a level that would change anything very much as far as consumers are concerned. In short, gas and electricity prices have fallen a bit but remain “elevated” by historic standards.

We have corrected some data bugs from last issue that readers had noted. Hopefully not too many left. Thanks everyone.

Figure 5: Summary

Bond prices fell although onl 10 bps. Oil was largely unchanged coal down 2% in USD.

Figure 6: Commodity prices. Source: Factset

Share Prices

Lithium shares have been hit by fears of oversupply. Interestingly AGL share price is below last year’s level and has been massively outperformed by Origin (ORG) in the past 12 months. We see this as just a fund manager rotational play.

It was predictable that worries over ORG’s balance sheet would eventually subside and that fund managers would look to lock in gains on AGL once futures prices stopped rising. For all AGL’s talk it’s worth recalling it remains by far Australia’s largest CO2 emitter and this remains a long term liability.

Figure 7: Selected utility share prices

Figure 8: Weekly and monthly share price performance

Volumes

Figure 9: electricity volumes

Base Load Futures, $MWH

Figure 14: Baseload futures financial year time weighted average

Gas Prices

Figure 15: STTM gas prices

 

Figure 16 30 day moving average of Adelaide, Brisbane, Sydney STTM price. Source: AEMO

 

David Leitch is principal of ITK. He was formerly a Utility Analyst for leading investment banks over the past 30 years. The views expressed are his own. Please note our new section, Energy Markets, which will include analysis from Leitch on the energy markets and broader energy issues. And also note our live generation widget, and the APVI solar contribution.