Strong demand for fossil fuel burn from the power sector this month, given below-average wind levels and colder weather, lifted generation from gas-fired plants to the highest monthly level on record.
Gas-fired generation has been at an average of 11.06GW this month and is on track to reach the highest for any month. Gas-fired plants peaked on 9 December at 13.15GW, reaching 14.58GW at 17:30-17:45 local time.
Unit D at Emsland has generated 183GWh, followed by Irsching 5 at 163GWh and Dusseldorf Lausward F at 125GWh.
Day-ahead clean spark spreads for a unit with a 41pc efficiency — the lowest in the gas-fired fleet — have averaged €2.14/MWh this month and are on track to be the highest since September. These units have been profitable to run in hours 7-20 with spreads as high as €21.39/MWh for hour 17.
German coal-fired generation has increased to 9.28GW from 7.09GW in November and is on track to be the highest for any month since January 2019. Coal-fired output was 13.93GW on 9 December — the highest since 24 January, reaching 16.27GW at 15:00-15:15 local time.
The Karlsruhe refinery's RDK 8 unit has generated 167GWh, followed by Lunen 1 at 150GWh and Ibbenburen B at 142GWh.
Day-ahead clean dark spreads for a unit with an efficiency of 36pc have averaged €4.03/MWh this month, their highest since November 2018. Dark spreads suggest these plants have been profitable to run in hours 7-20, reaching €22.52/MWh for hour 17.
Lignite-fired generation has been its highest since July 2018 at 15.03GW, rising to 16.24GW on 8 December. Neurath G and F have generated 217GWh and 210GWh, respectively, followed by Boxberg Q, at 185TWh.
More gas displaces coal
A faster increase in European coal than NCG gas prices, paired with gains in European carbon allowances, helped to push more gas-fired plants ahead of high efficiency coal-fired units.
Average day-ahead break-even costs show that a unit with an efficiency of 55pc has held a narrow advantage to 46pc-efficient coal-fired units this month. These gas-fired units were at a wider disadvantage in November.
A 46pc gas-fired unit moved ahead of a 38pc coal-fired plant this month, after holding a narrow disadvantage in November. These gas-fired units have advanced in the merit order to a marginal disadvantage to 40pc coal-fired plants. Overall 61pc-efficient gas-fired plants have remained ahead in the merit order followed by 43pc lignite, 59pc and 55pc gas, and 42pc coal.
Fundamentals
Firm fossil fuel-fired output has been favoured by lower renewable power generation and colder weather.
Wind power generation has averaged 11.49GW this month, below 15.55GW in November and the three-year average of 19.85GW. Solar power output has averaged 709MW, down from 2.11GW in November. The share of renewable generation has been 29.5pc this month and is on track to be the lowest for any month since January 2017.
Low wind levels have also weighed on German net exports, which declined to 8.38GW, from 9.30GW in November.
German power demand has averaged 59.8GW so far this month, its highest since February this year and above the five-year average for the month.
Outlook
Industrial power demand tends to decline towards the end of the month amid Christmas holidays.
Germany will also enter a tougher lockdown from 16 December until 10 January.
Wind power is forecast to rise slightly over the next six days at 15.95GW, but temperatures are forecast to fall from end of next week, with minimum values in Essen expected to be up to 3.15°C below the norm from 26 December until at least 17 January.
And German power plant availability is expected to decline by 4.3GW, as a result of the first coal phase-out tender and the shutdown of one lignite-fired unit. Two of those coal-fired plants are high efficiency units — Westfalen and Moorburg — and another two with 38pc efficiency — Ibbenburen and Walsum 9.
The January base-load contract is trading at a level where 49pc-efficient gas-fired units and 40pc-efficient coal-fired plants would just be profitable to run.
