april 10th, 2018 | wk.14 n. 100 - duferco energia · der - duferco energy report april 10th, 2018 |...

April 10th, 2018 | WK.14 n. 100

1. THE ENERGY CONTEXT

Closing of the quarter.Q1 is over and, with it, winter and (hopefully!) cold weather. The beginning of the summer semester also marks the transition to the new thermal year and the beginning of gas injection into the warehouses.

-203080

130180230280330380430480

January February March

[mln

m3]

Input Gas Q118 vs Q117

Import 2018 Import 2017 Daily storage flow 2018

Daily storage flow 2017 Input 2018 Input 2017

0

50

100

150

200

250

300


[mln

m3]

Output Gas Q118 vs Q117

Industrial 2018 Industrial 2017 Thermoelectric 2018

Thermoelectric 2017 Civilian 2018 Civilian 2017

Comparing input and output of the Italian gas network for the first quarter of the current year with the data for 2017, the peculiarity of the month of January 2018 is immediately noticeable. The input at the beginning of the year was much lower than in January 2017, mainly due to a drop in imports that was caused by a reduced demand for civilian heating. The vertical line in the graphs shows the approximate moment when both input and output of the first quarter of 2018 have exceeded those of 2017. As you can see, it was mainly the civilian demand that shifted the balance during the month of January, influenced by the temperatures which were also responsible for ‘re-balancing’ the situation in the following two months. As a matter of fact, looking at the overall data there are no major discrepancies between Q117 and Q118, despite a very different beginning of the year:

Input [mln m3] Output [mln m3]

Q117 24.186 24.889

Q118 24.669 25.240

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In Q118 compared to Q117, input and output increased by approx. 2% and 1.5% respectively. Having a closer look at the month of March, two peaks in demand are visible at the beginning and in the second half of the month, because of the lower temperatures. In response, warehouses triggered significantly higher supply flows compared to the same period of 2017, also due to an increase in imports, which caused the market tension we have already mentioned in previous DERs.As far as power is concerned, in the month of March the PUN (average purchase price) was at 56.91€/MWh, around 12.5€/MWh higher than in March 2017. As for gas prices, the main cause was the anomalous cold which characterized the whole month and also supported the demand for electricity, as seen in the graph.

500.000550.000600.000650.000700.000750.000800.000850.000900.000950.000

1.000.000


[MW

h]

Electricity demand Q118 vs Q117

Demand 2018 Demand 2017

At some point the electricity demand curves for Q118 and for Q117 start to intersect, in a very similar period to the inversion already identified for gas. However, the total quarterly demand is also comparable to last year’s, with significant deviations mainly visible in the month of March:

[MWh] January February March Total

2017 25.951.080 23.121.959 24.082.847 73.155.886

2018 25.357.046 24.342.951 25.611.813 75.311.810

2018 vs 2017 -2,29% 5,28% 6,35% 2,95%

Looking at the near future, the expected mild temperatures could open up new opportunities in terms of purchase prices, considering the close connection between temperatures and prices over the last few months. In addition, we must take into account the potential of hydroelectric production that will flow into the network in the coming spring months, thanks to abundant winter snowfalls and recent rains which filled in the basins. As usual for long-term products, let’s keep an eye on the Brent trend.

1

35

45

55

65

75

85

95

105

115

125

135

145

25

35

45

55

65

75

85

95

gen-06

gen-07

gen-08

gen-09

gen-10

gen-11

gen-12

gen-13

gen-14

gen-15

gen-16

gen-17

gen-18

[€/t][€/b

l]

Brent & Coal spot

Brent [€/bbl] Coal (asse sec.) [€/t]

ITA-FRA

Cal19 9,20 €/MWh -2,64%

Cal20 7,35 €/MWh +1,20%

Cal21

2. POWER IN SUMMARY

DER - Duferco Energy Report April 10th, 2018 | WK.14 n. 100

52 5243

54 54

33 32 2934 3635 38 37

45 42

25

30

35

40

45

50

55

60

65

70

75

80

2014 2015 2016 2017 2018*

[€/M

Wh]

ITA GER FRA52,08 52,31 42,78 53,95 54,16

32,76 31,63 29,98 34,19 36,39

34,63 38,48 36,74 44,96 41,76

2014 2015 2016 2017 2018*

Spot

Pow

er

Mar

ket

49,00

57,00 56,91

49,22 48,7050,80

57,0054,50 55,00

52,55

60,3959,11

40

45

50

55

60

65

Gennaio Febbraio Marzo Aprile Maggio Giugno Luglio Agosto Settembre Ottobre Novembre Dicembre

[€/M

Wh]

PUN 2018

Spread ITA-GER 19,31 20,68 13,79 19,76 17,77

Spread ITA-FRA 17,45 13,83 6,03 8,99 12,40

Spread Spot Power

2014 2015 2016 2017 2018*

Cal19 50,40 -0,40% mCal20 47,65 -0,03% mCal21

Cal19 36,35 +0,31% kCal20 35,50 +0,39% kCal21

Cal19 41,20 +0,12% kCal20 40,30 -0,25% mCal21

OTC

Pow

erM

arke

t

Spread OTC PowerITA-GER

Cal19 14,05 €/MWh -2,17%

Cal20 12,15 €/MWh -1,21%

Cal21

1,00

1,10

1,20

1,30

1,40

1,50

1,60

gen-06

gen-07

gen-08

gen-09

gen-10

gen-11

gen-12

gen-13

gen-14

gen-15

gen-16

gen-17

gen-18

Cambio €/$

Country Product €/MWh Weekly variation

2

mkmk

mkkm

All the forward prices of the DER are purely indicative and they refers to the mid-level closing of the day before.

-4E+09

-2E+09

0

2E+09

4E+09

6E+09

8E+09

1E+10

1,2E+10

1,4E+10

1-Apr

1-May

1-Jun

1-Jul

1-Aug

1-Sep

1-Oct

1-Nov

1-Dec

1-Jan

1-Feb

1-Mar

[sm

3 ]

Italy Storage - STOGIT

Δ vs anno precedente 2017/2018 2018/2019

PSV

Cal19 20,43 -0,06% mCal20 19,31 -0,14% mCal21

TTF

Cal19 18,41 -0,07% mCal20 17,46 -0,15% mCal21

3. GAS IN SUMMARY


PSV [c€/Smc] 24,62 23,41 16,61 20,49 22,02

TFF [c€/Smc] 22,15 20,93 14,78 18,26 20,20

Brent [$/bbl] 99,59 52,22 43,33 53,23 65,61

2014 2015 2016 2017 2018*

Spot

Gas

&

Oil M

arke

ts

25 2317 21 2222 21

15 18 20

100

5243

5366

15

35

55

75

95

115

10

15

20

25

30

35

2014 2015 2016 2017 2018*

PSV TTF Brent

10

15

20

25

30

35

40

45

gen-13

apr-13

lug-13

ott-13

gen-14

apr-14

lug-14

ott-14

gen-15

apr-15

lug-15

ott-15

gen-16

apr-16

lug-16

ott-16

gen-17

apr-17

lug-17

ott-17

gen-18

apr-18

lug-18

ott-18

[c€/

smc]

PSV spot [c€/smc] TTF [c€/smc]

Spread PSV-TTF [c€/smc] 2,47 2,48 1,83 2,24 1,83

Spark Spread [€/MWh] -0,03 2,76 7,63 10,58 7,54

Spread Spot Gas

2014 2015 2016 2017 2018*

OTC

Gas

M

arke

ts

Product c€/smc Weekly variation

Spread PSV-TTF

Cal19 2,01 c€/smc -0,00%

Cal20 1,85 c€/smc -0,00%

Cal21

0

5

10

15

20

25

30

35

gen-06

lug-06

gen-07

lug-07

gen-08

lug-08

gen-09

lug-09

gen-10

lug-10

gen-11

lug-11

gen-12

lug-12

gen-13

lug-13

gen-14

lug-14

gen-15

lug-15

gen-16

lug-16

gen-17

lug-17

gen-18

[€/t]

CO2 Spot

3

mkkm

All the forward prices of the DER are purely indicative and they refers to the mid-level closing of the day before.

4. POWER MARKETS


The first week of the month closed at 51.8 €/MWh slighty above last deals of April product, which settled at 49.5 €/MWh the last day of liquidity. Next weeks are expected to have a decrease thanks to mild temperature and the shutdown of heating in climate zone D and E (April 15, 2018).

49,00

57,00 56,91

49,22 48,70 50,8057,00 54,50 55,00 52,55

60,39 59,11

3035404550556065707580859095

100


[€/M

Wh]

PUN medio storico PUN min PUN max PUN 2018

PUN min: is the minimum monthly average value of each month from 2004 to 2017PUN max: is the maximum monthly average value of each month from 2004 to 2017

POWER ITALY - SPOT

POWER GERMANY - SPOT

29,46

40,1237,36

34,12 31,85 34,10 35,30 34,1238,13 37,62

45,7139,37

202530354045505560657075808590


[€/M

Wh]

GER medio storico GER min GER max GER Spot 2018

GER min: is the minimum monthly average value of each month from 2004 to 2017GER max: is the maximum monthly average value of each month from 2004 to 2017

POWER FRANCE - SPOT

34,95

48,70 48,26

37,6732,50 34,65 35,40 33,77

40,6346,59

57,2051,61

1520253035404550556065707580859095

100105110115120125


[€/M

Wh]

FRA medio storico FRA min FRA max FRA Spot 2018

FRA min: is the minimum monthly average value of each month from 2004 to 2017FRA max: is the maximum monthly average value of each month from 2004 to 2017

4All the forward prices of the DER are purely indicative and they refers to the mid-level closing of the day before.

40414243444546474849505152535455

ott-16

nov-16

dic-16

gen-17

feb-17

mar-17

apr-17

mag-17

giu-17

lug-17

ago-17

set-17

ott-17

nov-17

dic-17

gen-18

feb-18

mar-18

apr-18

mag-18

giu-18

lug-18

ago-18

set-18

ott-18

nov-18

dic-18

[€/M

Wh]

Cal19 Cal20


POWER ITALY - FORWARD

A sharp up-trend is continuing from the middle of February due to lots of drivers that are still strong (i.e. gas that doesn’t show signs of drop, tempera-tures are still cold for the period).

POWER GERMANY - FORWARD

POWER FRANCE - FORWARD

2425262728293031323334353637383940

ott-16

nov-16

dic-16

gen-17

feb-17

mar-17

apr-17

mag-17

giu-17

lug-17

ago-17

set-17

ott-17

nov-17

dic-17

gen-18

feb-18

mar-18

apr-18

mag-18

giu-18

lug-18

ago-18

set-18

ott-18

nov-18

dic-18

[€/M

Wh]

Cal19 Cal20

3233343536373839404142434445

ott-16

nov-16

dic-16

gen-17

feb-17

mar-17

apr-17

mag-17

giu-17

lug-17

ago-17

set-17

ott-17

nov-17

dic-17

gen-18

feb-18

mar-18

apr-18

mag-18

giu-18

lug-18

ago-18

set-18

ott-18

nov-18

dic-18

[€/M

Wh]

Cal19 Cal20


5. GAS MARKETS


GAS ITALY - SPOT

The winter phase of withdrawal ended in March and the month closed at 23.8 €/MWh (with some spikes at the beginning of the month) while April, to date, is almost at 21 €/MWh (week end included). We’re very far from 18 €/MWh of April 17, but boundary conditions have changed, firstly CO2 that almost tripled.

GAS TTF - SPOT

BRENT - SPOT

21,0323,73 24,64

21,70 21,54 21,43 22,2320,97 21,10 20,75 21,95

23,34

10

15

20

25

30

35

40

45


[c€/sm

c]

PSV-Day Ahead medio storico PSV-Day Ahead min PSV-Day Ahead max PSV-Day Ahead 2018

PSV-Day Ahead min: is the minimum monthly average value of each month from 2004 to 2017PSV-Day Ahead max: is the maximum monthly average value of each month from 2004 to 2017

19,7221,24

25,86

19,68 19,26 19,16 19,6918,51 19,42

18,0420,65 21,15

5

10

15

20

25

30

35

40


[c€/sm

c]

TTF-Day Ahead medio storico TTF-Day Ahead min TTF-Day Ahead max TTF-Day Ahead 2018

TTF-Day Ahead min: is the minimum monthly average value of each month from 2004 to 2017TTF-Day Ahead max: is the maximum monthly average value of each month from 2004 to 2017

253035404550556065707580859095

100105110115120125130135

gen-0

6ap

r-06lug-0

6ott-

06ge

n-07ap

r-07lug-0

7ott-

07ge

n-08ap

r-08lug-0

8ott-

08ge

n-09ap

r-09lug-0

9ott-

09ge

n-10ap

r-10lug-1

0ott-

10ge

n-11ap

r-11lug-1

1ott-

11ge

n-12ap

r-12lug-1

2ott-

12ge

n-13ap

r-13lug-1

3ott-

13ge

n-14ap

r-14lug-1

4ott-

14ge

n-15ap

r-15lug-1

5ott-

15ge

n-16ap

r-16lug-1

6ott-

16ge

n-17ap

r-17lug-1

7ott-

17ge

n-18ap

r-18lug-1

8ott-

18

Brent spot [$/bbl] Brent spot [€/bbl]



GAS ITALY - FORWARD

Gas rises rapidly on Cal 19, more slowly on Cal 20, making spread year to year wider and wider. Spread PSV – TTF Cal remain steady at 1.9 €/MWh.

GAS TTF - FORWARD

GAS SPREAD PSV/TTF - FORWARD

18

19

20

21

22

gen-17

feb-17

mar-17

apr-17

mag-17

giu-17

lug-17

ago-17

set-17

ott-17

nov-17

dic-17

gen-18

feb-18

mar-18

apr-18

mag-18

giu-18

lug-18

ago-18

set-18

ott-18

nov-18

dic-18

[c€/sm

c]

Cal19 Cal20

16

17

18

19

20

21

22

gen-17

feb-17

mar-17

apr-17

mag-17

giu-17

lug-17

ago-17

set-17

ott-17

nov-17

dic-17

gen-18

feb-18

mar-18

apr-18

mag-18

giu-18

lug-18

ago-18

set-18

ott-18

nov-18

dic-18

[c€/sm

c]

Cal19 Cal20

1,5

2,0

2,5

gen-17

feb-17

mar-17

apr-17

mag-17

giu-17

lug-17

ago-17

set-17

ott-17

nov-17

dic-17

gen-18

feb-18

mar-18

apr-18

mag-18

giu-18

lug-18

ago-18

set-18

ott-18

nov-18

dic-18

[c€/sm

c]

Cal19 Cal20



6. FOCUSGoodbye Groeningen.In the end it will be closed. The largest gasfield in Europe, which once covered up to 10% of the European demand of gas, will eventually be brought to zero production by 2030 at the latest, because of a series of seismic events (the latest was recorded in January with a magnitude of 3.4) and the end of public acceptance for these risks, which had already led to several reductions over the last few years.The Dutch government made the announcement on Thursday, the 29th of March. This is the very last decision after years of steady decline, which had caused the production to be cut in half compared to the almost 54 billion cubic meters of 2013.In particular, the Minister for Economic Affairs, Eric Wiebes, has predicted that production will fall from the current 21.6 bln m3/year to 19.3, starting from the next thermal year (2018/19). Then to 17.5 in GY 2019/20; 13.5 in 2020/21, 12 in 2022, down to 0 by 2030.

0

5

10

15

20

25

30

Forecast produzione Groeningen [mld mc anno]

Freddo Media Caldo 12 mld mc

In the meantime, however, the latest EU Commission report on the European gas market underlined that in 2017 the EU gas demand corresponded to 491 bln m3, ie it increased by 6% compared to 2016 and reached the highest level since 2010.In 2017 Groeningen was covering around 4.5% of EU demand and, with an equal demand, the decline to 19.3 bln m3 next year would mean a re-duction of less than 0.5% compared to the needs. Judging from the TTF CAL19 and GY18/19 listings, markets are not concerned for 2019, considering that the percentage is all in all limited, but this reduction surely fuels the already quite tense future of gas.

7. WHAT DOES ENERGY HAVE TO DO WITH IT?

Mother Nature’s patent.Days are longer, temperatures are milder and nature is awakening. It is the perfect time to organize a refreshing walk in the forest and be sur-rounded by... thousands of precursors of modern photo-voltaic panels! As a matter of fact, since 2.5 billion years plants use solar energy through the chlorophyll photosynthesis, a process upon which life on our planet depends. The amount of energy captured by plants is huge and, most importantly, free.At the beginning of last century, Giacomo Cimician, a scientist and pro-fessor at the University of Bologna, was among the first to wonder why we do not exploit this immense energy source and, fascinated by the plants’ ability to use sunlight, he laid the foundations for the so-called “artificial photosynthesis”, ie the production of fuels through the conver-sion of solar energy. The “Cimician’s utopia” is an ongoing challenge and research to repro-duce this biological process is carried out all over the world (in Italy, for example, through the PHOEBUS project entrusted to the Milan Polytech-nic). The basic principle is to split water into its two components: hydro-gen (the fuel) and oxygen (the oxidizer), by following this simple relation: H2O + sunlight -> H2 + 1/2 O2The two elements are then rejoined in a combustion process or in a fuel cell, in order to produce thermal or electrical energy and again obtain water as a waste product. For the photochemical dissociation to take pla-ce, however, substances capable of absorbing sunlight and of catalyzing some of the expected reactions are needed. They should basically replace the role of chlorophyll in the natural pro-cess. At the moment, the best (although still not efficient) catalysts are very rare and expensive metals: colloidal platinum and colloidal ruthe-nium oxide. The Mit (Massachusetts Institute of Technology) has mana-

ged to create “artificial leaves” from nickel and cobalt, even less efficient but cheaper elements, which would allow for the design of a power plant or... an energy forest!



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april 10th, 2018 | wk.14 n. 100 - duferco energia · der - duferco energy report april 10th, 2018 |...

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