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© 2018 Aurora Energy Research Limited. All rights reserved.20/05/2020© CONFIDENTIAL: NOT FOR EXTERNAL DISTRIBUTION

Impact of Coronavirus on European energy markets

CONFIDENTIAL: NOT FOR EXTERNAL DISTRIBUTION

Weekly tracker for 20th May 2020

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Executive Summary

1. Comparisons to previous week unless stated otherwise

Update for week ending 17th May:1

▪ The number of new reported COVID-19 cases and deaths saw a persistent decline across Europe, as lockdown restrictions were eased in many countries

▪ Crude oil futures rose further on global production cuts and signs of a recovery in fuel demand

▪ NBP Gas futures for 2020 declined further due to high storage inventories and weak demand

▪ EUA Carbon prices continue to hover below €20/tonne – around 20% below pre-COVID levels.

▪ Power demand recovered across many European countries as restrictions are further relaxed, but still remains weak relative to the same period last year.

▪ Power prices declined across much of continental Europe, remaining on average 30% - 40% lower than pre-COVID levels.

▪ Germany has seen record instances of negative price hours in 2020. This was cause by high wind in February, and the effect of COVID restrictions in reducing power demand from March onwards.

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About Aurora

Aurora provides data-driven intelligence for the global energy transformation

Source: Aurora Energy Research

4CONFIDENTIAL: NOT FOR EXTERNAL DISTRIBUTION

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COVID-19 Forecast ReportScenario analysis for European power markets

▪ COVID-19 impact on power prices, generation mix, capacity additions and retirement, asset profitability and carbon emissions

▪ Asset valuation impact compared to stock market declines

o How will individual assets perform?

▪ Industry and technology winners and losers

▪ Implications for security of supply

▪ Risk of stranded assets

▪ All forecast data available in Excel

Recent impact of COVID-19 on European power markets

▪ Analysis of impacts on global economies

o What is the impact on recent growth?

▪ Analysis of impacts on global financial markets

o How are utility stocks performing?

▪ Analysis of impacts on power markets across Europe

o How are power prices developing?

o How is power demand evolving?

Drivers and assumptions of changes and scenario design

Forecast and implications of COVID-19 impact

We are pleased to offer a reduced rate for Aurora subscribers

In addition, we offer bespoke services, including portfolio stress testing, transaction support and board briefings

▪ Detailed description of framework and scenario design

▪ Economic Scenarios:

1. Mild Global and European Recession

2. Severe Global and European Recession

3. Severe Global Recession and European Depression

4. Global and European Depression

▪ Forecast and scenario drivers include demand, supply, commodity prices, lockdown duration, and investment/financing

Comprehensive scenario report and forecast dataset for

1 2 3

clientsupport@auroraer.com +49 (0) 30 120 84969 | +44 (0) 7741 909078

For more information, please contact Client SupportTo pre-order, please use the form on our web page

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1. COVID-19 reported cases

2. COVID-19 impact on European crude oil, gas and carbon markets

3. COVID-19 impact on European power markets

Contents

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Total cases per 1 million population12

Total number of COVID-19 confirmed cases exceeds 1.3 Million across Europe

Sources: EDCD, Worldometer

1. Chart is in log scale. 2. Data to 18h May

100

10

1

10,000

1,000

10,000,000

100,000

1,000,000 UK

4th May

23rd March

6th April

20th April

18th May

Italy

Spain

Germany

France

Netherlands

Ireland

Poland

EU-27 + UK

9th March

5,950

4,908

3,735

3,735

3,632

2,626

2,577

2,117Germany

Ireland

Spain

EU27+UK

Italy

France

UK

Netherlands

499Poland

Total number of reported cases12

7CONFIDENTIAL: NOT FOR EXTERNAL DISTRIBUTION

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Daily increase in reported cases1

Most European countries have seen a sustained decrease in number of new COVID-19 cases and deaths

Sources: EDCD

1. Chart is in log scale. Rolling 7 day average.

0.1

1.0

1,000.0

10.0

100.0

10,000.0

100,000.0

29th March

1st March

15th March

12th April

26th April

10th May

Daily increase in COVID-related deaths1

Spain

Italy

Germany

France

UK

Netherlands

Ireland

Poland

EU-27 + UK

0.1

1.0

1,000.0

10.0

100.0

10,000.0

10th May

26th April

15th March

1st March

29th March

12th April

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COVID restrictions have been loosened in many European countries over the last fortnight

Sources; Oxford COVID-19 Government Response Tracker

80200 40 60 100

Spain

Poland

France

Germany

Netherlands

Ireland

Italy

UK

1st April

1st March 1st May

16th May

Country Changes to restrictions

France Some schools, shops & public amenities reopened

Germany Shops and schools allowed to reopen already

Ireland Some shops reopen from 18th May

Italy Some shops & factories reopened from 4th May; schools closed until Sept

Netherlands Primary schools reopened 11th May; bars/restaurants closed until 20th May

Poland Retail & leisure premises reopened on 4th May; schools reopen 24th May

Spain Some small businesses, bars and restaurants reopened

UK Construction and manufacturing operations partially resumed; primary schools to open for selected years from 1st June

COVID stringency Index,Index (0-100)

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1. COVID-19 reported cases

2. COVID-19 impact on European crude oil, gas and carbon markets

3. COVID-19 impact on European power markets

Contents

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Oil futures continued to recover, supported by ongoing production cuts and easing lockdown restrictions

Sources: Aurora Energy Research EOS, Reuters

Prompt crude oil futures1,$/bbl

Crude oil futures,$/bbl

WTI Brent

Jan-20

40

Jan-23Jan-22Jan-21 Jan-24 Jan-250

10

20

30

50

60

70

Futures gain momentum with the combined effect of falling

crude production in major producers and recovering auto

fuel demand

11/05/2020

04/05/2020

20/04/2020

19/05/2020

-40

-30

-20

-10

0

10

20

30

40

50

60

2nd March

16th March

30th March

14th April

28th April

10th May

Prompt futures climbed as Chinese oil demand

rebounded to pre-COVID-19 levels

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NBP gas futures remained in a bearish trend due to muted demand

Sources: Aurora Energy Research, Reuters

Note: 1. Futures are a rolling 7 day average.

▪ The front part of the NBP futures curve was further hit due to limited storage injection driven by full inventories and warm weather

▪ But this decline is in part offset by the upside risk, caused by potential interruption on Russian gas flows via the Yamal pipeline as Poland will terminate the transit deal with Russia in May without renewal

Average monthly NBP gas futures,1

pence / therm

Average monthly NBP gas futures,

€/MWh

0

5

10

15

20

25

0

5

10

15

20

25

30

35

40

45

50

55

60

65

Jan-20 Jan-21 Jan-22 Jan-23 Jan-24 Jan-25

19/05/2020

11/05/2020 14/04/2020

30/03/202027/04/2020

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Gas demand showed a sign of slow recovery as some COVID restrictions in Europe were lifted

Sources: Aurora Energy Research EOS

Notes: 1) Envelopes for monthly NW Europe gas storage inventory are calculated by taking the maximum and minimum monthly values from December 2014 until February 2019.

Monthly NW Europe gas consumption,bcm

0

100

200

300

400

500

600

700

800

900

1,000

1,100

29th March

1st March

15th March

12th April

26th April

10th May

+5%

Daily NW Europe gas consumption,mcm

GB

Germany Netherlands

France

0

5

10

40

15

20

25

30

35

Apr-20

Jun-19

Dec-19

Apr-19

Aug-19

Oct-19

Feb-20

Min-max envelope(Dec 14–Feb 19)1Total Consumption

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NW European gas storage inventory is 10% higher than trailing 5 year average

Sources: Aurora Energy Research EOS

Notes: 1) Storage data is based on net daily flows. 2) Envelopes for monthly NW Europe gas storage inventory are calculated by taking the maximum and minimum monthly values from December 2014 until February 2019. 3) Envelopes for daily NW Europe gas storage inventory calculated by taking the maximum and minimum daily values from March 2015 until May 2019.

Monthly NW Europe gas storage inventory,bcm

0

10

40

5

15

20

25

30

55

35

45

50

60

29th March

1st March

26th April

17th May

Daily NW Europe gas storage inventory,bcm

15

60

20

25

30

35

45

10

0

50

55

40

5

Feb-20

Apr-19

Jun-19

Aug-19

Oct-19

Dec-19

Apr-20

Total inventory Min-max envelope (Dec 14-Feb 19)2,3

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EU ETS prices continued to hover around €20/tonne –around 20% below pre-COVID levels

Sources: Aurora Energy Research, Eikon

Lower Aviation demand: Global flight volumes fell by 2/3rds during March. Easyjet grounded its entire fleet. UK recently cancelled auction for EUA Aviation allowances

Lower Industrial demand: Factory closures due to COVID restrictions; reduced demand for metals and cement due to reduced manufacturing and construction activity

Lower Power market demand: Lower power demand (explored in next slides) reducing permit demand from coal and gas generators

MSR Mechanism: will gradually remove excess permits from the market.

ETS reforms: European Commission remains committed to tighten ETS as part of Green Deal, but looks likely to be delayed; Poland challenging logic of tightening ETS at this time

15

25

10

20

16-Mar

2-Mar

13-Apr

30-Mar

27-Apr

9-May

-21%

Spot EUA price,€/tonne

Downward pressure on price in short term

Upward pressure on price in medium term

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1. COVID-19 reported cases

2. COVID-19 impact on European gas and carbon markets

3. COVID-19 impact on European power markets

Contents

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European power demand has seen a slight recovery as lockdown measures are eased

Sources: ENTSO-E, Aurora Energy Research

Data excludes self-generation and embedded renewables consumption

4-May9-Mar

10

2

023-Mar 6-Apr 20-Apr

1

3

4

5

6

7

8

9

11

Germany

Spain

Poland

France

Italy

Netherlands

UK

Ireland

Weekly sum of power demand in 2020,TWh

Change in demand versus same week last year:

w.c. 11May

w.c. 4May

ES: -12%

PL: -3%

IE: -11%

FR: -16%

IT: -17%

UK: -21%

DE: -7%

NL: -3%

Lockdown introduced

-9%

-8%

-11%

-13%

-12%

-9%

+6%

-5%

Week commencing

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European power demand has seen a slight recovery as lockdown measures are eased

Sources: ENTSO-E, Eurostat, Aurora Energy Research

COVID-19 cases1

Per 1 million population

3,735 5,950 3,6233,735

Power demand by end user2

40 28 33 45 31

32 31 31 27 31

22 36 31 25 356 4 34 3

1) Data to 18th May 2) Data for 2018 calendar year

Hourly loadduring sample weeks(% of same week in 2019)

60

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80

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100

110

08

:00

12

:00

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:00

w.c. 11 May w.c. 4 May

Demand recovers significantly in France as restrictions are relaxed.

Italian demand increases slightly as lockdown eased

Other Household Commercial Industrial

Demand increases as Germany continues to open commerce sector

2,117

GB demand recovers as some workplaces reopen

18CONFIDENTIAL: NOT FOR EXTERNAL DISTRIBUTION

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Day-ahead prices decreased across much of continental Europe, whilst Ireland and Spain saw an increase

Sources: ENTSO-E, Aurora Energy Research

9-Mar

45

20-Apr23-Mar

15

4-May6-Apr5

10

25

20

30

35

40

50

Spain

Germany

Poland

UK

France

Italy

Netherlands

Ireland

Weekly average day-ahead power prices in 2020,EUR/MWh

Change in prices versus previous week:

w.c. 11May

w.c. 4May

ES: +33%

PL: +7%

IE: -15%

FR: +29%

IT: +17%

UK: -5%

DE: +17%

NL: +7%

-11%

-5%

0%

+9%

-9%

-4%

-7%

+13%

Week commencing

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65 9 11 12 13

160

15 16 1714

100

19 200

20

1 82

40

3 4

80

200

120

7

60

180

18

220

10

140

Germany has seen record number of negative prices in 2020, due to high wind in February and COVID effects

Sources: Netztransparenz, ENTSOE, Aurora Energy Research

Cumulative number of negative price hours,#

Calendar Week

2015 2016 2017 2018 2019 2020 Lockdown

1 2Record high wind generation in February (20 TWh) leads to high number of negative price hours early on in the year

1

COVID-19 lockdown further increases negative price hours due to lower demand in sunny hours during the day

2

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

14

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0

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11

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1

13

2

3

4

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Germany: negative prices have been concentrated during daytime in 2020, driven by lower demand

Sources: Netztransparenz, ENTSOE, Aurora Energy Research

Negative price hours (Jan-May average),#

Hour of the day

2015 2016 20182017 2019 2020

Daytime occurrence of negative price hours

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Aurora continues to help you navigate the impact of COVID-19 on European energy markets

Source: Aurora Energy Research

COVID-19 Special report Consultancy & Bespoke Analytics

How do our market intelligence subscribers stay up-to-date on COVID-19 implications?

▪ Power Market Forecast reports incorporating COVID impacts on commodities and demand

▪ Group Meetings will explore sensitivitieson the impact of COVID on European power markets and asset economics

▪ Podcasts with industry leaders

▪ Coronavirus tracker email assessing the impacton European power and commodities markets

▪ Comprehensive exploration of the range of scenarios from the fallout of COVID-19

▪ Impact on power prices, spreads, viability of investments, carbon emissions

▪ Differences in impact amongst technologies

▪ Implications on asset values vs stock market

▪ Bespoke scenarios for business planning and transaction support

▪ Stress testing portfolios

▪ Defensive/opportunistic portfolio optimisation

▪ Board/Management briefing

For more information contact Felix.Chow@Auroraer.com for GB, Ireland, France and Iberia and Hanns.Koenig@Auroraer.com for Germany, Poland and BeNeLux

May Jun Jul

GB FRDEGroup Meeting

Market ForecastReport

GBIberia