SCENARIOS-Europe’s power market faces winter squeezes

* UK gas storage being tapped already

* Nordic hydro levels low

* German wind outlook low

LONDON, Nov 30 (BestGrowthStock) – With the season’s first cold
spell gripping much of Europe this week, there are concerns that
last year’s record winter could be repeated, causing power
supply squeezes across the continent.

Weather Services International (WSI) expects temperatures
for December-February to average colder than normal for Britain
and western continental Europe. [ID:nLDE6AL0YQ]

Beyond this, weather and renewable energy supplies across
much of western Europe could be hit this winter by the North
Atlantic Oscillation (NAO).

Meteorologists say a negative NAO usually points to colder,
calmer and drier winters in northern Europe and wetter, windier
weather across the Iberian Peninsula and Italy as westerly winds
from the Atlantic are pushed south.

The NAO has been negative since autumn 2009, pointing to a
possible repeat of last year’s winter. [ID: nLDE69O1ZR]

Here is an overview of the outlook of Europe’s biggest
energy markets.

BRITAIN

The UK is bracing itself for a repeat of last year’s cold
winter, and because around 40 percent of the its power is
generated from gas and the vast majority of Britain’s households
are heated through gas, utilities have already begun tapping
into storage.

Wholesale gas traders started withdrawing from Rough —
Britain’s only long-range storage facility — two weeks ago and
supplies have been sinking since to about 17 percent below
levels seen this time last year, according to National Grid.

The premature drain could spell supply jitters early next
year.

“If you do the numbers, storage will be empty some time in
early February if it stays this cold,” said Jason Durden, energy
trader at Energy Quote JHA. [ID:nLDE6AP0WB]

FRANCE

French power supplies are expected to be greater until
January 2011, compared to the previous season, with power grid
RTE expecting moderate supply shortage risks for the period.

But the system could tighten from February until the end of
March, when new production capacity will not compensate
maintenance outages in the nuclear sector.

Hydropower levels are expected to be slightly lower this
winter than the previous one because of planned maintenance, RTE
said.

“From February, French nuclear availability will be lower
than in previous years which could cause a problem in case of a
cold snap,” one trader said.

GERMANY

Indications for power providers in Germany are that demand
in the coming winter will be above average and wind power supply
probably less ample than on average.

This would mean lower power generation levels at a time of
increased demand.

Temperatures between Dec. 1 and Feb. 28 will probably be
colder and with slower wind speeds than normal, said Joerg
Riemann, a meteorologist at MeteoGroup.

Typical western low pressure fronts from the Atlantic, which
normally bring relatively mild winters temperature-wise, but are
often accompanied by stormy winds, are not expected to be as
frequent this winter, he said.

Germany has 27,000 megawatts of installed wind capacity, but
wind generation has been below average for the past year.

THE NORDICS

Sweden, Denmark, Norway and Finland may experience record
spot prices for the second winter running as the region’s water
reservoirs, which provide about half of the region’s power
capacity, are significantly less full than usual.

“When you look at the reservoirs, we are in a much worse off
situation than we were at the same point last year,” said Karl
Johan Sundin, a power analyst at Point Carbon, a Thomson Reuters
company.

The head of Norwegian aluminium firm Norsk Hydro (NHY.OL: ),
whose smelters in Norway are major power consumers, said the low
levels in the water reservoirs were a concern.

Norway’s oil and energy minister has also said he is
“worried” about the country’s power supply. [ID:nLDE68R0YB]

On the upside, Sweden’s ageing nuclear plants appear to be
holding up better than they did last year, Point Carbon’s Sundin
said.

OVERALL OUTLOOK

The overall outlook for western and northern European power
markets in winter is bullish as supply squeezes loom in most
markets.

In the gas dependent UK, the low storage capacities are
already being tapped. In the hydro-dependent Nordic markets,
water levels are unusually low, and in Germany-Europe’s biggest
wind power generator-wind levels are below average.

This means that there is the possibility of price spikes if
markets stop sending supplies across borders because of
heightened domestic demand, should West and North Europe be hit
by long and simultaneous cold spells.
(Reporting by Vera Eckert, Muriel Boselli, Gwladys Fouche,
Karolin Schaps; Writing by Henning Gloystein; Editing by William
Hardy) (([email protected]; +44 207 542 6659;
Reuters Messenger: [email protected]))

SCENARIOS-Europe’s power market faces winter squeezes