January Market Watch

In this second Market Watch our experts Reinhard Kaisinger and Chitransh Lot assess last Month’s key developments and trends in the electricity market. Focusing on the day-ahead markets (SDAC), they provide insights into the pricing dynamics, net positions, and noteworthy shifts in various regions. What are their key insights?

Downward price trends across Europe

Europe experienced a notable decrease in average prices this January compared to the same period last year. This decline can be attributed to the reduction in both gas and CO2 prices, even though January experienced significantly colder temperatures compared to the previous year.

Examining specific regions, the Baltics encountered the highest electricity prices during this period due to increased power demand prompted by cold weather. On the other hand, the Nordic countries witnessed a general decrease in prices compared to the previous year, driven in particular by a surge in wind generation. Finland stood out as an exception within the Nordic region, experiencing relatively high average day-ahead prices due to a combination of cold snaps and lower generation availability to cover peak demand.

Main developments in price convergence across Europe

Witnessing a convergence trend in many European regions, the Core region stands out. The Core region consists of 13 countries: Austria, Belgium, Czechia, Croatia, France, Germany, Hungary, Luxembourg, the Netherlands, Poland, Romania, Slovakia and Slovenia. When excluding Poland from the calculation, this region is experiencing convergence below 10 €/MWh nearly 40% of the time. Conversely, the Nordics emerged as the region with the lowest level of price convergence.

Resurgence of French nuclear power

Following an extensive maintenance period and subsequent low availability, France achieves record-breaking nuclear generation in January, reaching 35.8 TWh. This marks the highest output over the last three years. If this trend persists, France is poised to surpass its total nuclear power output in 2024 compared to the previous year, potentially impacting prices positively across continental Europe and beyond.