Power Prices hit Record Highs in Europe
The month of June witnessed the largest jump in forward power prices in the history of European power markets: The German front year power contract traded up 22% and closed at 88 EUR/MWh and the Nordic contract gained 15% to 68 EUR/MWh. The two power contracts are now up 44% and 32% respectively since December. Key driver for the rise in power prices is the shortage of coal on the global market. Coal prices rose by 26% in June alone and are up over 100% since the beginning of the year. About 30% of the power generated in the EU-25 is derived from coal and coal plants often determine the market price. Share prices of power companies have so far not reacted to the strength in power markets. If power prices remain at current levels, we expect considerable consensus earnings upgrades for the European utility industry. Please refer to the PDF document below to vie the full monthly report for the EIC Energy Utility Fund.