POWER: Weekly News Highlights MNI Power Service Part 2/2

See below the weekly news highlights of the MNI power Service for the week 26-30 May.

• EMISSIONS – EU ETS TNAC in 2024 stood at 1,148mn EUAs, up 3.27% y/y and between market expectations, while the auction volume reduction is higher than expectation.
• Speculator positioning in EU ETS futures on the ICE exchange was bullish for the fourth consecutive week with net long positionings at the highest since late March
• Speculator positioning in UK ETS futures on the ICE exchange cut bullish bets for the first time since early March, ending the previous nine consecutive week growth, amid potential profit-taking activities following the EU-UK ETS linkage deal.
• EUAs could peak at €212/t in 2029 if the Market Stability Reserve (MSR) review next year decided to tighten the market by removing allowances in the market.
• Barclays suggested that UK-EU ETS link would likely raise UK power prices by £5–10/MWh.
• BNEF forecasts that the EUAs to average €73 in 2025, then steadily rise to €147 and €185 in 2030 and 2035 respectively.
• BNEF expects the oversupply of annual EUAs to persist in 2025, as 2024 TNAC hit a three-year high while auction volume remains high, it said. Nevertheless, it forecasted EUAs to rise to €88/t by 2026.
• The latest bi-weekly Poland EU ETS CAP3 auction cleared at €70.54/ton CO2e, down 1.82% compared with the previous bi-weekly Poland auction at €71.85/ton CO2e.
• The UKA ICE auction cleared at higher at £50.37/ton CO2e, compared with £47.44/ton CO2e in the previous auction on 14 May.
• A total of 11mn EUAs will be auctioned next week, with four auction sessions will be held.
• The EC is set to publish the measure for 2040 emissions target on July 2.
• The EU is currently on course to cut net emissions by around 54% by 2030 versus 1990 levels, nearing the 2030 target of a 55% reduction.
• Germany’s new centrist coalition has aligned on a 2040 climate target following discussions with EU Climate Commissioner Wopke Hoekstra, hinting the likeliness of the EC’s upcoming 2040 proposal.
• A coalition of over 150 major businesses, investors, and associations, including EDP, EDF, SSE and more are calling on the EU to maintain its 2040 climate target of cutting emissions by 90% versus 1990 level.
• NATGAS – Funds positioning in ICE TTF futures was again bullish for the third consecutive week with net long positioning rising to the highest since early April with the latest CoT data as of 23 May.
• Unless demand remains this low throughout the rest of the year, current levels of LNG sendout in Europe are likely to lead to storage levels at the start of November well below 80% of total capacity.
• BloombergNEF revised down its gas storage forecast for Europe by November 1 from 94% to 86% in its latest release.
• European gas storage was 47.15% full on May 28, according to GIE, compared to the previous five year average of 58.46%. Net injection rates have trended near-normal in recent days, having fallen below normal through most of the second half of May.
• Germany’s DET said May 26 that it has commissioned a third FSRU on the North Sea as part of efforts to diversify Germany’s energy supply.
• Gas grid operators from five countries comprising the Vertical Corridor from Greece to Ukraine have agreed to a unified low-cost gas transit fee.
• China’s imports of LNG are on track to fall 30% on the year in May, as Beijing sources cheaper alternatives.
• Extreme heat in parts of China is serving as a prelude to summer when weather is likely to place an unprecedented burden on the country’s power network, boosting natural gas demand.
• The early onset of India’s monsoon season is likely to hit LNG demand, as above-normal rainfall brings cooler weather and reduces power demand.