Spot prices will remain low. Since the start of 2020, European power prices have been dented by an average 5%-7% drop in demand due to the mildest winter in history, COVID-19 lockdown measures, increased supply from renewables, and a drop in commodity prices. Prices are only likely to partially recover. We expect some price increases over 2021-2023, except in the Nordics, as demand rebounds and more coal and nuclear power plants are shut down. However, we now expect prices to be about 20% below our previous forecast published in November 2019. The financial impact on our rated European power generators is generally manageable in 2020, thanks to price hedges. The impact will be greater over 2021-2022, as the hedges are lower and the forward prices weaker than we anticipated last year. Renewables will come to play a greater part in power price formation over the next decade. This is on the back of EU leaders signing the European Green Deal in December 2019 and governments’ recognition during the COVID-19 pandemic that the energy transition will play a central role in Europe’s economic recovery.
S&P Global 8th June 2020 read more »