EU utility hedging rates inch higher, CEZ ramps up thermal output

Published 12:48 on May 10, 2016  /  Last updated at 11:28 on May 11, 2016  /  EMEA, EU ETS  /  No Comments

Forward power hedging rates at European utilities CEZ and Enel inched upwards in Q1, the companies said in financial results released on Monday.

Forward power hedging rates at European utilities CEZ and Enel inched upwards in Q1, the companies said in financial results released on Monday.

Italy-based Enel said it had hedged 80% and 100% of its expected Y+0 output in Italy and Spain respectively, slightly up from the 77% and 100% a year earlier.

For Y+1 output, Enel had hedged 35% in both Italy and Spain, which was slightly down on the 36% rate for Italy last year but well above the 7% rate for Spain.

But the company had significantly slowed its hedging quarter-on-quarter, advancing 2016 hedging by just 20 percentage points versus the 60 seen over Q4 2015.

Enel didn’t break down its sales or generation figures by region, but said its global power output fell 8.3% to 66 TWh, compared to 72 TWh a year earlier.

CEZ

Meanwhile, Czechia-based utility CEZ said it had hedged 72% of its expected Y+1 output, 41% of Y+2, and 18% of Y+3, slightly up on the 73%, 38%, and 17% hedging ratios for the equivalent periods a year earlier.

Yet, the company slowed its hedging rate quarter-on-quarter, advancing it by 11 percentage points over Q1 for those three years, compared to 24 percentage points in Q4 2015.

CEZ insisted it is continuing to hedge “in the medium term in line with standard policy”.

Output at CEZ’s thermal units – the vast majority of which are carbon-intensive coal and lignite – rose 4.5% to 9.2 TWh in Q1, while production at its emission-free nuclear units dropped 15% due to extended safety inspection outages.

CEZ’s overall Q1 generation fell 5% to 17.0 TWh over the quarter, while its power sales dipped 1% to 10.1 TWh.

For the whole of 2016, CEZ predicts its ETS-related output will climb 11% to 33.2 TWh, outpacing an overall generation increase of 9% to 64.6 TWh.

FACTFILE

  • Utility hedging rates are closely monitored by participants in the EU ETS because the data can provide a window into existing and future EUA demand from the bloc’s biggest allowance buyers.
  • Vattenfall has already reported advances in its Q1 hedging, while Uniper results are due on Wednesday, RWE on Thursday, and ENBW on Friday.

By Ben Garside – ben@carbon-pulse.com