EU Carbon Allowances, Power Advance as Merkel Party Loses State Election
German power for next year rose toa 19-month high and European Union carbon permits gained after Chancellor Angela Mekel’s coalition lost in a state election,meaning the country’s oldest reactors may never reopen.
Power for next year in Europe’s biggest market gained asmuch as 1.9 percent to 59.80 euros a megawatt-hour, matching itshighest price since August 2009, according to broker pricescompiled by Bloomberg. EU carbon allowances for December rose asmuch as 3 percent to 17.35 euros ($24.37) a metric ton on theICE Futures Europe exchange in London.
“We think the outcome of the Baden-Wuerttemberg electionis bullish for both EU allowances and German power prices, andwe reiterate our year-end 2011 price forecast for EU allowancesof 21 euros a ton,” Mark Lewis, a Deutsche Bank analyst basedin Paris, said today in an e-mailed research note. “It nowseems clear that a material amount of CO2-free output will haveto be replaced with fossil-fuel fired output.”
Nuclear output accounted for 23 percent of the powergenerated in the country last year, according to the Berlin-based BDEW utility industry lobby group. Hard coal and ligniteaccounted for about 41 percent, and natural gas, 14 percent.
German utilities E.ON AG (EOAN), RWE AG (RWE) and EnBW Energie Baden-Wuerttemberg AG agreed to shut 25 percent of the country’snuclear capacity this month for safety checks after the nucleardisaster in Japan. Radiation levels that can prove fatal weredetected today outside reactor buildings at Japan’s FukushimaDai-Ichi plant for the first time, complicating efforts tocontain the worst disaster since Chernobyl in 1986.
Permanent Shutdowns Likely
The majority of the seven temporarily idled German reactorswill probably be permanently shut down, Hermann Groehe, thegeneral secretary of Merkel’s Christian Democratic Union, saidon ARD television today.
“What happened in Japan was so improbable that I believeit will have an impact” on Germany’s risk assessment fornuclear power, Merkel said today. All Germany’s seven reactorsbuilt before 1980 are shut for the review.
In France, Europe’s second-biggest market, Electricite deFrance SA halted the 1,330-megawatt Paluel 2 nuclear plant at4:40 p.m. today, according to information on the RTE gridwebsite. No reason was given.
European union carbon permits for December traded at 17.25euros at 4:33 p.m. London time. Next-year power was at 59.80euros, matching its March 16 intraday high.