Through the winter, water values for NO2 are priced against the expensive gas hours on the Continent.
A water value of around €121/MWh compares with a peak-hour power price of around €136/MWh, with peak prices clearing gas SRMC by more than €20/MWh.
The Picture Reverses in Summer
Come summer, the picture inverts.
Water values sit well above expected NO2 and German power prices as NO2 sees high volumes of low-priced imports from Germany and the Netherlands during the day.
Hydro reservoirs then produce when the sun sets and demand increases.
Spring Could Look Very Different
The dynamics are shifting, and the spring ahead looks interesting given where reservoir filling levels are today.
In March, the P90 water value currently sits above gas SRMC, at €175/MWh versus €173/MWh.
This means that if we get a dry autumn and limited reservoir refilling, NO2 hydro could be priced above Germany and become more dependent on imports from neighbouring price areas.
From a Gas-Driven to a Solar-Driven Price Regime
We are moving from a gas-driven to a more solar-driven price regime, combined with the flexibility of hydro reservoirs through spring and summer.
We are already seeing hydropower production profiles shift, and we expect this to continue as solar capacity on the Continent keeps growing.
Simulations by Volt Power Analytics using 30 historical weather years from 1991 to 2020.
