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ECMWF products and the European energy markets ECMWF, Reading, 16 th of June 2005 Stefan Meulemans Sempra Energy Europe Ltd. London.

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Presentation on theme: "ECMWF products and the European energy markets ECMWF, Reading, 16 th of June 2005 Stefan Meulemans Sempra Energy Europe Ltd. London."— Presentation transcript:

1 ECMWF products and the European energy markets ECMWF, Reading, 16 th of June 2005 Stefan Meulemans Sempra Energy Europe Ltd. London

2 Liberalization Free choice of gas and electricity provider Opening of the European energy markets

3 Pan-European market? Currently national but interconnected gas and electricity markets Goal is to have one European supply- demand based market

4 National electricity markets Nord Pool Scandinavia OMEL Spain Powernext France EEX Germany APX The Netherlands UKPX The UK

5 Oil and Gas Brent crude, NYMEX and heating oil Gas

6 Futures and forwards Day ahead (EC) Week ahead (EC) Month Ahead (EC) Cal ahead QENOYc1, Last Trade, Candle 06/06/

7 Demand and supply These two variables determine the forward electricity, gas and oil prices Weather important parameter, both for demand and supply

8 Temperature Heating demand (contrast north-south) Cooling demand, more in USA but changing climate? Cooling water nuclear plants Melt ice and snow

9 Cold spell early March (Paris)

10 Cold spell early March NBP

11 Day ahead German electricity

12 Gas demand UK (Sempra)

13 850 hPa temperature anomaly (WSI)

14 Hot weather August 2003 Prices spikes due to A/C Cooling water nukes Drought and low hydro levels Low wind in Germany

15 Wind Short range deterministic – storms! Mid range ensemble ECMWF Installed wind capacity

16 Deterministic

17 Ensemble Germany (Point Carbon)

18 Nordic markets Weather crucial due to very high hydro capacity Market very dependent on ECMWF model

19 Dry weather in Nordic…

20 Wet weather in Nordic…

21 Currently… Cal 06 hovering and no obvious trend Very important to see extreme drought or wet weather Confidence level crucial QENOYc1, Last Trade, Candle 13/06/

22 ECMWF 10 day ensemble (Point Carbon)

23 ECMWF cluster day 10 (Meteo Consult)

24 NAO outlook Based on ECMWF Particularly day 10 important Only what is not yet known by market important! Negative NAO years bullish et vice versa

25 ECMWF northern hemisphere (WSI)

26 Monthly outlook (Met Office)

27 Probabilistic long-range outlook Reduced risk on mid-range positions Now particularly for temperatures and precipitation, but wind would be interesting too When signal is strong, it makes sense to take significant long or short positions

28 Seasonal outlook (Met Office) Particularly useful if strong trends Interesting for electricity, gas and fuel oil markets (also USA) Also hydro

29 Also CO 2 and weather derivatives Cold winter or hot summer would also increase CO 2 output, and eventually general electricity prices Reduce risk in speculative weather derivatives contracts, or decreased hedging if seasonal outlook is showing strong trend

30 Summary ECMWF products useful to be ahead of the energy markets. Know first

31 What could be done? ECMWF 15-day but should start soon? Monthly outlook on daily base? Very interesting for development significant large-scale trends. Ready in morning? NAO ensembles? Skill research wind (extremes)


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