German power price scenarios: is the winter still too expensive?
After quite some days of declining power prices, it may be worth to have a closer look at current price levels and those for the upcoming winter. Is there still some premium left over or are German power prices back on a "fair" level?
So we used our inhouse power price model #RAMterm in line with current fuel prices, planned availabilities, expected X-border flows and lots of historical weather data (winter seasons since 1980) to build winter price scenarios. The outcome gives lots of information about prices, e.g., at climatological normal weather or for extremely cold or warm/windy winters - including their spreads and volatilities and so on. Summing it up there still seems to be a very long way to reach power prices at "fair" levels.?
In the plot attached, you can see market prices in black (cascaded by us), the 80% quantile in light blue, the mean (blue) and median (red). The recent 10 winter scenarios are charted in light grey.?While finding minor surplus in prices during October and begin November, this changes to a level of above 200€ from mid Dec to mid Feb - sometimes reaching 300€ premium - compared to current generation cost.?In?short: most weeks in winter are currently priced along the upper 10% of coldest winters (with low wind, as well).?
Of course, this is only a model and there are several uncertainties (e.g. French availabilities), but based on the model and historical data, the prices are still reflecting some "panic premium".