Market outlook March 2024
Electricity prices have fallen sharply on both the spot market and the futures market since the beginning of the year. The reasons include the low demand for gas with well-filled storage facilities. The outlook is also currently more in favour of the bears than the bulls on the market.
March 2024
The front year 2025 base lost a lot of value in the first quarter of 2024. While the product was still trading at over EUR 95/MWh at the beginning of January 2024, the lowest price was just under EUR 68/MWh on 23 February. This was a huge price slide - down by almost 30 per cent. This was followed by a price recovery, which peaked on 6 March at just over EUR 83/MWh for the front year. The product is currently trading at EUR 74/MWh and is almost exactly in the middle of the two aforementioned highs and lows.
Weak gas market
One important reason for the low electricity prices is the low gas price. This is due to the very good supply situation on the gas market and the persistently low gas consumption - particularly by industry. Gas storage facilities are still around 65 per cent full, meaning that the injection season will start from a very comfortable level at the end of March. With spot prices on the THE-market currently at around EUR 25/MWh and a price for the 2025 annual product of just under EUR 30/MWh, the gas market has also been at a significantly lower level since the start of the year: the front year saw a drop of 19%, spot -16%.
Allowance prices also low
This favourable environment on the electricity and gas market also had an impact on the market for European Union Allowances (EUA). However, the influence here is not clear, it can also be reciprocal. One often reads and observes that the bearish EUA market influences the market for fuels and electricity. At the beginning of the year, the EUA market was still trading at around EUR 80/t and had lost almost EUR 30 in value by 23 February. The price is currently just under EUR 56/t. A still gloomy mood in the economy and the resulting lower demand for energy are weighing on prices.
Outlook
If the geopolitical environment remains unchanged in the coming weeks, further downward pressure on prices can be expected. The additional expansion of photovoltaics of around 15,000 MW in 2023 will lead to unprecedented feed-ins from renewable energies in Q2 and Q3. This could lead to more negative prices than in 2023. The 2026 and 2027 base year products are currently trading well below EUR 70/MWh on the electricity market and could also be a target for the 2025 product. Meanwhile, the average spot price in 2024, which is around EUR 68/MW with a downward trend, currently provides the bulls on the market with few arguments.
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