Argus European Electricity

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1 Daily electricity market prices, news and analysis market headlines UK: Temperatures support front of curve Germany: Winter contracts rally German parties detail energy policy plans EU delays XBID power platform launch to June EdF proposes French nuclear shutdowns from 29 Germany needs carbon price prices Argus European OTC assessments Day ahead Week ahead Month ahead Quarter ahead Year ahead UK Base load t t t t t Peak load t t t t t Germany German year ahead base load Base load t t t t u Peak load t t 50. t t u Netherlands Base load t t t 39. t t Peak load t t t t u France Base load t t t t u Peak load t t t 40. t u Switzerland Base load t t t u Peak load t t t u Spain Base load u t t t u Peak load Italy Base load t t t t Dec Dec Jan Jan 18 Contents UK and Irish markets 3-4 German and Alpine markets 5-6 European intra-day markets 7-8 French market 9 Dutch and Belgian markets Spanish market 11 Italian market 12 Czech, Slovak and Polish markets Hungarian, Serbian and Slovenian markets Southeast European markets 17 Turkish market 18 Market news Renewable power (wind and solar) forecasts 25 Weather data and weather derivatives 26 Spark spreads Peak load t t t t Poland Base load t t t t t Peak load t t t t t Czech Republic Base load u t t t u Peak load u 63. t t t u Slovakia Base load u t t t u Peak load Hungary Base load u t t t u Peak load u - t u t u Serbia Base load u t t u Peak load Romania Base load t t u Peak load Turkey Base load t u t t Peak load *UK year ahead is annual October/April. No day-on-day change as first contract assessment

2 market summary Base load differentials to Germany Country Week ahead Month ahead Quarter ahead Year ahead UK u t t - France t t u u Switzerland u u u Netherlands u u t Spain t t u Italy u u u u Poland u u u t Czech Republic u u u u Slovakia +1. u t u u Hungary u u +5. u u Serbia u u u Turkey u u u +8. u Spark spread German month-ahead peak load Coal 38% Gas 49.13% Argus European OTC indexes Day ahead Month ahead Season ahead Total volume GWh UK /MWh ,038 Germany ,281 France ,571 Netherlands Czech Republic Oct Nov Dec Jan 18 Germany year-ahead base-load moving averages day avg 50 day avg 90 day avg Sep 17 1 Nov Dec Jan 18 European exchange summary Base load Peak load Off-peak French Epex Dutch APX Belgian Belpex German Epex/Phelix GB Hub na na Nord Pool na na Austrian Exaa na Polish Polpx *12hr Polish peak load na Czech OTE na na Slovak ISOT na na Slovenian BSP Southpool na Spanish Omel na na Portuguese Omel na na Greek SMP na na Romanian Opcom na na Italian PUN index na na Turkish PMUM na na Cropex (Croatia) day ahead na na Ibex Bulgaria day ahead na HUPX Hungary day ahead na na Page 2 of 33

3 UK and irish markets Temperatures support front of curve Downward revisions to temperature forecasts supported gas and power prices on Wednesday, causing the February contract to rise sharply into delivery. The February contract rose by 1.90/MWh in its last day of trading to expire at 49.80/MWh. Minimum temperatures in London were forecast between -1.5 C and 1.3 C over 5-14 February, on average 2.2 C below the seasonal norm. They were revised downward by on average 1.5 C/day. A rise of 2.30p/th on the corresponding NBP contract supported. The February clean spark spread for a 55pc efficient plant rose to.03/mwh, up from Tuesday s contract low of 9.66/MWh, while the spread for a 46pc efficient plant edged up by 0.06/MWh to 2.24/MWh. The rising power price and a decline in coal swaps greatly improved the outlook for coal-fired generation next month. The clean dark spread for a 38pc efficient plant rose to 3.34/MWh, up by 2.11/MWh day on day, and rising above the clean spark spread for a 46pc efficient plant for the first time in six sessions. Further out winter 18/19 rose by 0.55/MWh to 49.30/ MWh, a one-week high. Another five rounds of the T-1 capacity market auction for delivery in 18/19 were completed on Wednesday. Around 8.9GW remained in the auction by the end of round, down from around.6gw which entered the auction. Round 11 will begin at 9:00 GMT on Thursday with a price spread of -25/kW down from 75-70/kW in the first round. The spread will fall by 5/kW in each round. Almost 5.5GW could be procured at this level. National Grid was targeting 4.9GW in the auction, but this could rise Argus UK OTC assessments /MWh Base load Peak load Buy Sell ± Buy Sell ± Working day ahead Thursday Friday Saturday Weekend Week ahead Week Week Week February March April May June July nc Q Q Q Q Annual April Summer Winter 18/ Summer Winter 19/ Summer Winter / nc nc Summer UK front-three months base load /MWh 60 February March April Argus UK OTC indexes Daily Cumulative /MWh Vol GWh /MWh Vol GWh 55 Working day ahead , Weekend ahead Week ahead Month ahead ,116 Cumulative month-ahead January ,392 Season ahead , Nov 17 7 Dec 17 5 Jan Jan 18 Total reported trade (all contracts) 2,038 Average prices weighted by volume of trades Page 3 of 33

4 UK and irish markets to a maximum of 5.9GW. The previous T-1 auction cleared at just 6.95/kW. The N2ex for delivery on Thursday was 46.76/MWh, up slightly from the previous settlement of 46.42/MWh. Metered wind power generation was forecast to average.1gw on Thursday, up from around 9.8GW forecast for Wednesday. Argus UK Seasons /MWh Off peak Buy Sell Annual April Summer Winter 18/ Summer Winter 19/ Summer Winter / Summer N2Ex UK day ahead auction /MWh ± Base load APX UK day ahead auction Hours /MWh Vol GWh UK forward curve base load Base load ,756 Peak load ,9 Off peak , Jan Jan 18 Irish Single Electricity Market* day ahead ± /MWh ± Day ahead (TD-1) *average system marginal price (Provisional) TD is trading day 6am-6am Argus UK day ahead block contracts /MWh Bid Offer ± Feb 18 Feb 18Mar 18Mar 18Apr 18Jun 18Q2 18Q2 18Q3 18Q1 19 Feb 18 Feb 18Mar 18Mar 18 May 18Jul 18Q2 18Q2 18Q4 18 UK working day-ahead base load and peak load /MWh Base load Peak load Dec Dec Jan Jan 18 Blocks Blocks Block Block Argus UK weekday block contracts /MWh Day of trade Delivery type Delivery period Volume Price 29 Sep 17 UK WD Block 6 winter Gregorian Sep 17 UK WD Block 5 winter Gregorian Sep 17 UK WD Block 6 winter Gregorian Sep 17 UK WD Block 6 winter Gregorian Sep 17 UK WD Block 6 winter Gregorian Sep 17 UK WD Block 6 winter Gregorian Sep 17 UK WD Block 5 winter Gregorian Sep 17 UK WD Block 5 winter Gregorian Sep 17 UK WD Block 5 winter Gregorian Sep 17 UK WD Block 5 winter Gregorian Page 4 of 33

5 german and alpine markets Winter contracts rally The February contract recovered the losses recorded earlier this week in its last trading session while the March contract closed at a one-week high as temperature forecasts were revised lower to levels well below the seasonal norm from the start of next month which lifted winter contracts in European gas and power markets. Further out, the year ahead shrugged off the strength for contracts delivering the remainder of this year to close little changed on the day as the coal market clawed back some market share from gas in the expected merit order for next year. The February 18 contract rose by 1.40/MWh for base load and by 1.55/MWh for peak load to expire at 39.90/ MWh and 50./MWh, respectively, recovering from the previous session s multi-month lows. Temperature forecasts across the wider central west European market area were revised lower day on day on Tuesday which raised expectations for regional heating demand. Daily lows in the south German city of Munch were forecast to fall as low as -6.8 C on 9 February and to range between -6.9 C and 1.5 C on 1-14 February which compares with a seasonal norm of around -3 C for this time of year. And most recent forecasts confirmed an outlook of modest German wind power generation at the start of February following windy conditions on many days in January which lifted wind power generation to 14.49TWh on 1-30 January, compared with 7.94TWh throughout January 17 and just slightly below an all-time monthly high of 14.89TWh recorded in December last year. Daily average wind power generation was forecast in a range of 4.4GW-6.2GW on 5-7 February compared with average output of more than 30GW forecast for Wednesday, 31 January. The week ahead rallied to a close at 44.75/MWh for base load, rising by 3/MWh day on day, while the peakload week 6 contract posted a 7./MWh gain to 60.25/ MWh. Expectations of higher domestic electricity consumption and stronger cross-border demand for Germany commercial power exports helped to lift German clean dark and spark spreads for delivery in February. Clean dark spreads rose Argus Swiss OTC assessments Base load Peak load Buy Sell ± Buy Sell ± Working day ahead February Q Q Argus German OTC assessments Base load Peak load Buy Sell ± Buy Sell ± Working day ahead Thursday Friday nc Weekend Week ahead Week Week Week February March April May June July Q Q Q Q Q Q nc nc nc Argus German OTC indexes Daily Cumulative Vol GWh Vol GWh Working day ahead ,273 Week ahead ,471 Month ahead ,930 Quarter ahead , ,275 Year ahead , ,772 Total reported traded (all contracts): 17, Average prices weighted by volume of trades Argus Austrian OTC assessments Base load Peak load Buy Sell ± Buy Sell ± Working day ahead February Q Q Page 5 of 33

6 german and alpine markets by 1.53/MWh day on day to an implied 4.41/MWh for a 38pc-efficient coal plant while a sharp increase in NCG gas hub prices on the back of the lower temperature forecasts limited the gains for clean spark spreads for 55pc efficiency to a 0.16/MWh rise to an implied 3.82/MWh. Clean spark spreads for 59pc-efficient gas units and base-load delivery in February expired at 6.26/MWh, implying limited coal-to-gas fuel switching next month. Gains for the near term filtered through to the March contract which rose by 0.95/MWh for base load to close at 34.75/MWh, a one-week high. Weakness in the API 2 coal swaps market allowed clean dark spreads for a 38pc-efficient plant to rise by 1.17/MWh day on day but they remained in negative territory at an implied /MWh with highly efficient gas-fired units remaining at an advantage in the expected merit order for March. Further out, the year ahead closed at 34.35/MWh which was just 0.05/MWh day on day. Steady outright prices masked a shift to coal from gas burn for the 19 delivery year; Clean dark spreads for 19 delivery rose by 0.22/ MWh day on day to close at 1.01/MWh for 38pc while clean spark spreads for 59pc efficiency fell by 0.44/MWh but remained at a premium as they closed at an implied 1.84/ MWh. Clean spark spreads for delivery in -21 and an efficiency of 59pc also fell day on day but maintained a premium for clean dark spreads for 38pc-efficient plants. In the Austrian over-the-counter (OTC) market, the 19 contract exchange hands for 2MW in brokered deal at 36.50/MWh which was at a 2.15/MWh over the German front year at the time of the trade. Epex Phelix day ahead auction Hours ± Base load Peak load Off peak Off peak , Energy Exchange Austria (Exaa) day ahead Hours ± Base load Peak load Swissix day ahead hours ± Base load Peak load Off peak I 01-08, Nordic market Nasdaq OMX Nordic futures Base load Closing Price ± Day ahead Week Week February March April Q Q Q Q Nord Pool physical spot day ahead ± NKr/MWh Systemwide Page 6 of 33

7 European Intraday Markets Higher than forecast wind weighs Wind output on Wednesday morning was lower than the previous day but intraday prices were also lower as generation was higher than forecast levels. Hourly weighted average intraday prices were at a discount to the hourly day ahead prices throughout the session, dipping as low as.68/mwh for hour 4, over 9/MWh below the hourly day ahead price. Wind generation outperformed forecasts with output of 22.3GW in hour 3 compared to forecasts of 19GW from the four TSOs. Solar was also producing more than expected, reaching 5.8GW in hour 11 compared to forecasts 3GW. This was below the highs of 30GW for wind seen the previous day but the divergence from forecast output was still enough to keep intraday prices at a discount to the previous day. Lignite generation bottomed out at 13.8GW in the early hours, having reached as low as 8GW in the previous day. Gas generation also edged higher than the previous day, reaching a low of 2GW from 1.5GW on Tuesday morning. But hard coal output was lower than the previous day, bottoming out at 3.8GW on Wednesday morning after remaining above 4.5GW on Tuesday. While hard coal plants saw deeply negative dark spreads in the early hours on Tuesday, they were able to recoup their costs later on Tuesday as even clean spark spreads for a 36pc plant were positive during the afternoon and early evening hours and this may have encouraged plants to remain online earlier in the day in order to ramp up. But dark spreads for a 40pc plant based on day ahead coal and emissions prices were negative from 21:00 on Tuesday and were only due to turn positive for hour 18 on Wednesday, based on current hourly intraday prices. This could have discouraged some plants from remaining online at all during Wednesday. The most efficient gas plant at 61pc would have seen negative spark spreads from 23:00 on Tuesday onwards and based on current hourly intraday prices would only turn negative for around 3 hours in the evening. Intraday cross border allocation was suspended in the Germany to Austria direction from 03:00 CET to the end of Wednesday and trade immediately diverged with deals of between 18/MWh and 24/MWh concluded in the Austrian zone while deals in the German zones were between 5.80/ MWh and 15.80/MWh. French intraday prices were also lower day on day, reaching a low of 11.57/MWh, despite lower renewables and remained at a discount to hourly day ahead prices throughout the morning. Swiss prices were volatile but below day ahead hourly prices in the early hours, reaching 14.36/MWh German balancing vs Last intraday trade Last Trade Last Trade Balancing MW 29 Jan 12:00 30 Jan 12:00 31 Jan 12:00 Epex Spot day-ahead hourly vs intraday Day-ahead value Intraday average The European intra-day market commentary is published on the Argus Direct online platform at midday. Contact support@argusmedia.com for information regarding access to Argus Direct. 4k 3k 2k 1k 0k -1k Balancing MW Jan 26 Jan 27 Jan 28 Jan 29 Jan 30 Jan 31 Jan for weighted average compared to 39.36/MWh in hour 3. Real-time intraday trading data from Markedskraft Deutschland GmbH. Visit for more information about the visualisation of intraday live data. Page 7 of 33

8 french market Weekend rises amid outages All front of curve prices rallied, whilst some back of curve contracts fell to their lowest point for several months. The weekend contract rose 4/MWh to close at 39/ MWh. State-controlled utility EdF announced that the 905MW Chinon 4 nuclear reactor would be off line from 09:57 CET (08:57 GMT) on Wednesday until 23:00 CET on Saturday. And the 465MW Martigues Ponteau 5 gas-fired plant will be off line from 19:00 CET on Friday until 05:00 CET on Monday. Falling wind generation predictions may have provided further upward support to weekend prices. Hourly wind generation is now expected to average 3.3GW over the weekend, compared with the previous day s forecast of 7.4GW for the same period. Further out, the February base load contract gained 2/ MWh to expire at 48.75/MWh, compared to the February 17 contract s final price of 63.25/MWh. The February 18 contract averaged 55.13/MWh throughout its assessment by Argus, 11.80/MWh lower than the February 17 contract s average of 66.93/MWh. February 18 prices were weighed relative to the equivalent contract in 17 by increased nuclear availability, with a daily average of 7.3GW from a maximum 63.13GW of nuclear capacity expected to be off line throughout the month, compared to 12.1GW in February 17. But February clean spark spreads for a 55pc efficient plant widened 0.72/MWh day on day to expire at 12.21/ MWh, having started the month at 16.41/MWh. The Argus assessment of the spreads averaged 15.76/MWh. Downward revisions to temperatures and subsequently higher expectations for electric heating demand drove the day-on-day gains for winter contracts and underlying clean spark spreads. French TSO RTE on Tuesday forecast peak demand to reach up to 84.7GW in week 6, on 7 February, which compared with previous forecasts for peak demand at 83.4GW for that day. Only contracts at the back of the curve made losses. The 19 base load contract fell 0./MWh to a three-month low of 39.40/MWh. And the contract decreased 0.05/MWh to settle at 39./MWh, its lowest point in five months. Argus French OTC assessments Base load Peak load Buy Sell ± Buy Sell ± Working day ahead Weekend Week ahead Week February March April Q Q Q Q Argus French OTC indexes Daily Cumulative Vol GWh Vol GWh Working day ahead Week ahead February ,503 Q , ,780 Total reported traded (all contracts): 1, Average prices weighted by volume of trades Epex France day ahead auction Hours ± Base load Peak load Off peak I Off peak II Off peaks 01-08, French month-ahead differential to Germany German = Jan Dec Jan Jan 18 Page 8 of 33

9 dutch and belgian markets Front month rises February prices increased, but expired lower than the equivalent 17 contracts. The Dutch base load February contract rose by 1/MWh to 43.75/MWh, expiring 5.45/MWh lower than the Dutch contract for delivery in February 17. But the Argus assessment of the February 18 contract averaged 46.36/MWh, 4.33/MWh higher than the February 17 contract s average of 42.03/MWh. Dutch February clean spark spreads for a 55pc efficient plant narrowed 0.19/MWh day on day to expire at 7.71/ MWh, having started the month at 8.70/MWh. The Argus assessment of the spreads averaged 8/MWh. The Belgian February base load contract rose 0.50/MWh to expire at 48.75/MWh, 11.50/MWh below the Belgian February 17 contract s final price of 60.25/MWh. The Belgian February 18 contract averaged 50.83/MWh across its Argus assessment, slightly below the February 17 contract s average of 52.73/MWh. Further out, the Belgian March contract traded at 40/ MWh. A new planned outage has been announced at the 140MW Scheldelaan Exxconmobil gas-fired plant, scheduled to last from 19 February until 1 April. Argus Dutch OTC assessments Base load Peak load Buy Sell ± Buy Sell ± Working day ahead Weekend Week ahead Week February March April Q Q Q Q nc nc nc Argus Dutch OTC indexes Daily Cumulative Vol GWh Vol GWh Working day ahead Week ahead February ,003 Q , ,688 Total reported traded (all contracts): 3 APX day ahead Hours Base load Peak load Off peak Belpex day ahead Hours Vol GWh Argus Belgium OTC assessments Base load Buy Sell ± Working day ahead February Q Base load ,160 Peak load ,841 Off-peak 01-08, ,319 Tri market day ahead coupling Belpex Spread to APX Spread to Epex, France Base load Peak load Off-peak Page 9 of 33

10 spanish market February expires at two-week high A higher-than-expected spot combined with colder weather forecasts and a rally in PVB gas prices supported the front month contract significantly which expired at the highest level in almost two weeks. Minimum temperatures for the beginning of February were revised down and now they are expected to reach levels of minus 3 C at least during the first days of the month, from the minus 2 C forecast previously. This could support stronger power demand for heating during the coldest hours of the day. The February contract rose by 1.95/MWh day on day and closed at 54.15/MWh reaching the highest level since 15 January. A higher-than-expected spot offered added support as well as a strong rise in corresponding PVB gas prices which rose at a faster rate by 1.30/MWh on the day to 21.2/MWh. The February power contract expired around 2.8/MWh below at where the February 17 contract expired last year mainly due to an increase in hydropower stocks in recent weeks which suggest output from hydro plants next month may be healthier than last year. The stronger increase in gas prices for next month continued to weigh on clean spark spreads for the most efficient plants 57pc although the decline was modest by 0.07/ MWh on the day to 9.58/MWh. But the limited decrease was not sufficient to maintain a short-lived discount to clean dark spreads for next month as API 2 coal swaps continued to decline by 0.19/MWh on the day to.32/mwh and widened the corresponding emissions-adjusted dark spreads for a 38pc efficient plant to 12.53/MWh and at a premium of 2.95/MWh to spark spreads and weighing on potential for coal-to-gas switching next month. The second-month ahead contract March- followed upward direction from its previous month and changed hands last at 49.05/MWh, a 0.60/MWh day on day rise. Closer in, the Omie pool for Thursday delivery settled at 54.33/MWh, down by 2.74/MWh day on day. The spot received downside pressure from forecasts of higher wind generation at an hourly average of 7.5GW from the 3.5GW forecast for the previous day. Argus Spanish OTC base load assessments Buy Sell ± Working day ahead Week ahead February March April Q Q Q Q nc Iberian Pool day ahead Spanish settlement ± Portuguese settlement ± Iberian Omip exchange Closing bid Closing ask Settlement ± Week-ahead na na Week 06 na na Week 07 na na February March Q Q na Q1 19 na na Spanish month-ahead differential to France Dec Dec Jan Jan 18 Page of 33

11 italian market Gas and temperatures support front The front of the curve recorded strong gains on Wednesday, supported by higher gas prices and forecasts of lower temperatures. Temperatures for the first fourteen days of February were expected lower than the seasonal norm. In the region of Milan the average minimum temperature was forecast at minus 0.6 C compared with a long-term average of 0 C. Temperatures should drop in particular from 8 February and the minimum average over 8-14 February period was forecast at minus 2.1 C. Temperatures in Rome were forecast to be higher but average minimum temperature could drop to 3.6 C from next week to 14 February compared with an average of 6.4 C forecast for the rest of this week. This combined with the fact that Wednesday was the last day for February delivery, supported short-term contracts with week-ahead and week 7 rising by 5/MWh and 1.75/MWh to 58.25/MWh and 54.25/MWh respectively. The February contract also extended its gains, closing the period as front month to 54.65/MWh, up by 2./MWh day on day and to the highest value since 12 January. Gas prices for February and March delivery rose sharply but corresponding power contrats outpaced these gains with clean spark spreads for a power plant with an efficiency of 55pc rising to 14.80/MWh and.46/mwh, respectively. The front quarter rose by 0.50/MWh to 44.70/MWh but it failed to match gains of corresponding PSV prices, reducing its clean spark spread for a plant with 55pc efficiency to 7.12/MWh, the lowest value since 17 January. But the contract widened its premium over France to 11.70/MWh. The Pun settled at 46.95/MWh, down by 5.41/MWh day on day, the lowest value since 22 January. Lower power demand, which was scheduled at 942GWh, combined with forecasts for higher wind output helped to put pressure on the day-ahead settlement. Wind output was forecast at an hourly average of 3.4GW, or a 37pc load factor, up by 2.3GW day on day. Sicilian prices settled at the lowest value since 21 January, closing at 51.38/MWh. This shrank the zone's premium over Pun to just 4.43/MWh, from 30.05/MWh in Tuesday's auction for Wednesday delivery. Argus Italian OTC assessments Base load Peak load Bid Ask ± Bid Ask ± Week ahead Week February March April Q Q Q Q Italy GME day ahead Average weighted ± Base load na Italy/France month-ahead base load Italian French Dec Dec Jan Jan 18 Italian OTC year-ahead base load Dec Dec Jan Jan 18 Page 11 of 33

12 czech, slovak and Polish markets Near curve gains Strong gains in Germany and a colder outlook supported the front-week and front-month contracts in the Czech Republic and Slovakia. Minimum temperatures in Prague and Bratislava were revised as much as 3 C lower over the upcoming fortnight, with levels expected below seasonal norms during 6-14 February which could support domestic heating demand. The Czech over-the-counter (OTC) week-ahead base load closed at 44.50/MWh, up by 1.50/MWh from its previous close. And the Slovak OTC week-ahead base load closed at 45.95/MWh, up by 0.90/MWh from its previous close. February was also up in both markets, closing higher by 1.65/MWh in both the Czech Republic and Slovakia. The front month had fallen in each of the previous three sessions, having followed Germany lower for most of January and narrowed some of Germany s discount. The Czech frontmonth base load was down by 4/MWh and the Slovak front month down by 4.45/MWh since 2 January. Germany was down by 3/MWh. On the prompt, forecasts for milder weather conditions weighed on the day-ahead Czech and Slovak markets, which settled at parity. The Czech day-ahead base load settled at 35.67/MWh, down from 36.93/MWh a day earlier. Minimum temperatures in Prague were forecast around 1.5 C on Thursday, up from around -0.2 C expected on Wednesday. And overnight lows in Bratislava were forecast around 1.8 C on Thursday, up from -0.7 C expected on Wednesday. Hungary also settled in line with the Czech and Slovak day-ahead markets, having settled at a 2.83/MWh premium to Slovakia for power delivery on Wednesday. In contrast to lower prompt prices in the Czech and Slovak markets, Poland s day-ahead base and peak-load hh Czech month-ahead base load Dec Dec Jan Jan 18 Argus Czech OTC assessments Base load Peak load Buy Sell ± Buy Sell ± Working day ahead Week ahead Week February March April Q Q Q Q nc nc Argus Polish OTC assessments Base load Peak load Buy Sell ± Buy Sell ± Zloty/MWh Working day ahead Week ahead nc nc Week nc nc Week nc nc February nc nc March nc nc April nc nc Q nc nc Q nc nc Q nc nc Q nc nc nc nc nc nc conversion from Zloty/MWh Working day ahead Week ahead Week Week February March April Q Q Q Q Page 12 of 33

13 czech, slovak and Polish markets contracts moved slightly higher, by roughly 1.05/MWh and 2.30/MWh respectively. Poland rose amid a series of domestic outages, including two one-day extensions at units of the Patnow lignite-fired plant and Rybnik hard coal-fired plant. Unavailable capacity of 0MW at Patnow was pushed back to return at midnight on 2 February, and 225MW at Rybnik due boiler leakage was also pushed back to a return at that time. Net power flows in the Slovakia to Hungary direction were scheduled to average 559MW on Thursday, down from 1.2GW on average scheduled for Wednesday. German wind power output was forecast to reach around 26.4GW on Thursday, compared with 30.5GW expected on Wednesday. The 1GW unit 1 at the Temelin nuclear plant in the Czech Republic is scheduled to return on 7 March, unchanged from the previous remit. Argus Slovak OTC base load assessments Buy Sell ± Working day ahead Week ahead February Q Argus Czech OTC indexes Daily Cumulative Vol GWh Vol GWh Working day ahead Week ahead February Q ,090 Total reported traded (all contracts): Average prices weighted by volume of trades OTE/ISOT Czech-Slovak coupled market day ahead Base load Peak load Czech Slovak Polish Polpx day ahead Zloty/MWh Base load (IRDN24 average) Peak load (IRDN24 average) Central east/southeast Europe spreads to Germany German Contract Base load ± Working day ahead Week February Q Poland Contract Spread ± Working day ahead Week February Q Czech Contract Spread ± Working day ahead Week February Q Hungary Contract Spread ± Working day ahead Week February Q Page 13 of 33

14 hungarian, serbian and slovenian markets Prompt premiums fall Contracts delivering for the remainder of 18 rose on Wednesday amid gains in the German market, though the front-week and month premiums fell amid more regional utility selling. February gained in its last day of trading but still expired 6/MWh where it opened as the front month Serbia utility EPS announced another sell tender on Wednesday. The company will offer week-ahead peak load again in a tender to take place on Thursday. Last week, the company sold peak load for the current week at a minimum price of 48/MWh. Flows have been switching on the Hungary-Serbia border this month, but Serbia is still running as a net exporter on the border over the past two weeks at around 15MW. Serbian flows to Hungary are scheduled to rise to 115MW on Thursday from around MW on Wednesday. The 333MW Tent A4 lignite unit and the 1MW Novi Sad gas-fired unit are due to return to the grid on 3 February having gone off line on 27 and 29 January, respectively, in unplanned outages. And river levels on the Serbian Danube at Bezdan are forecast to drop to 298cm by Saturday from 344cm at present, but are expected to rise again to 300cm on Sunday. The front-week and month contracts both gained in Hungary, though their premiums to Germany fell amid strong gains in the latter market. February expired around 6/MWh from where it opened as the front month at 43.65/MWh and at a strong discount to the 74.80/MWh at which February 17 closed as the front month. The Hupx delivered at 36.28/MWh last month, and the Hupx in February has not delivered at a premium to the January level in the same year since 13. The 500MW of capacity at the Paks nuclear plant that had been off line since 22 January in an unscheduled outage began ramping up again on Wednesday evening, having had its return time changed several times over the past four days. Liquidity strengthened in the intra-day market in some hours on Wednesday, with the 16:45-17:00 product trading for 19MW, the highest amount for any product during the day and at a premium to the hourly day-ahead price for that hour, which cleared at 40.89/MWh. Argus Hungarian OTC assessments Base load Peak load Buy Sell ± Buy Sell ± Working day ahead Week ahead February March nc April Q Q Q Q nc nc Ft/MWh conversion from Working day ahead,993 11,024-2, ,156 14,466-2, Week ahead 14,1 14, ,2 19,412 1, February 13,505 13, ,838 17, March 11,923 11, ,761 15, April 11,613 11, ,373 14, Q ,644 11, ,955 14, Q ,319 13, ,590 16, Q ,032 14, ,575 18, Q ,861 14, ,637 18, ,776 12, ,513 16, ,621 12, ,327 16, Argus Serbian OTC base load assessments Buy Sell ± Working day ahead Week ahead February Argus Slovenia OTC base load assessments Buy Sell ± Working day ahead Week ahead February BSP Southpool Slovenian day ahead ± Vol MWh Base load ,6 Peak load na Hungarian HUPX day ahead ± Base load Croatian Cropex day ahead ± Base load Page 14 of 33

15 Central Eastern European markets German front three months base load German year-ahead base-load clean dark spread 50 February March April 4.50 Coal 38% hh Sep Oct Dec Jan Aug Oct 17 6 Dec Jan 18 Hungary day-ahead base and peak load Czech and Germany year ahead 80 Base load Peak load 39.0 Czech German hh Dec Dec Jan Jan Dec Dec Jan Jan 18 Hungary and Germany year-ahead base load Polish month-ahead diff to Germany and Czech 50 Hungarian German 2 Polish-German Polish-Czech hh Dec Dec Jan Jan Dec Dec Jan Jan 18 Page 15 of 33

16 southeast european markets Albania s Kesh sells February Albanian state-owned generator Kesh was offering short term power on Wednesday as hydro generation recovered in January to cover domestic demand while Romanian near months traded higher. Kesh was selling 300MW of base load for delivery on 5-9 February and 170MW of base load for -28 February. The generator also offered 150MW for hours 06:00-17:00 local time and 21:00-22:00 on 5-9 February along with 0MW of 00:00-07:00 and 22:00-24:00 on 5-9 February. It was also offering 170MW for hours 06:00-17:00 and 21:00-22:00 on -28 February. Albania became a net exporter in January with flows averaging 1MW, after being a net importer of 293MW a month earlier. Recovering hydro generation helped the country to cover domestic demand and increase exports this month. The Albanian February was last assessed at 45/MWh compared with the Hungarian expiry of 43.65/MWh today. Romanian front month closed at RON /MWh ( 40.55/MWh), after trading 5 times today to shed RON0.85/ MWh at the expiry. Downward revisions to temperature forecasts have likely provided support to near curve. In Bucharest, lows of minus 5-7 C are expected on -14 February while temperatures are forecast to hold 2-7 C above seasonal norms at minus 4 to 2 C on 1-9 February. March traded RON 1.50/MWh higher on the day to be assessed at RON /MWh. Bulgarian day-ahead turned out at its lowest for a working day this year to drive higher exports on the Turkish border. Bulgarian net imports in January averaged 31MW, as imports gained in the second half of the month after holding below exports in the first 2 weeks. Bulgarian February was last assessed at 40.15/MWh compared with the Turkish expiry of 38.91/MWh today. Argus Romanian OTC base load assessments Lei/MWh Lei/MWh Buy Sell ± February March April Q Q February March April Q Q Argus Bulgarian OTC assessments 25 Jan 18 Buy Sell ± February Argus Greek OTC assessments 25 Jan 18 Buy Sell ± February Argus Albanian OTC assessments 25 Jan 18 Buy Sell ± February Greek day ahead pool System marginal price forecast ± Romanian Opcom day ahead Lei/MWh Vol MWh Base load ,434 Bulgarian Ibex day ahead ± lev/mwh ± Base load Peak load Page 16 of 33

17 turkish market Bulgarian discount drives imports Turkey was scheduled to become a net importer on Thursday as the Exist day-ahead cleared at a premium to the Bulgarian Ibex spot while February traded lower on the day. Turkish net imports to Bulgaria were scheduled at 81MW for 1 February, after the country had been as a net exporter throughout January. Turkey will likely become a net importer on the Bulgarian border in February as the grid operator Teias did not offer any monthly export capacity. The Exist day-ahead cleared at 39.42/MWh, which was at a 8.43/MWh premium to the Ibex spot. Turkish net exports in January averaged 31MW, as imports gained in the second half of the month after holding below exports in the first 2 weeks. Turkish front month traded twice to expire at TL182/MWh ( 38.91/MWh), which compared with the Bulgarian close of 40.15/MW. The Hungarian front month premium to Turkey was 4.74/MWh, which would not justify transit exports as the yearly auction for 50MW of base load cleared at 5.05/ MWh. Independent gas-fired generation turned out lower in January, as utilities using more than 50pc of their demand had to pay higher prices (see separate story). State-run trading firm Tetas purchased around 1.3GW of power in the day-ahead market in January after buying 1.5GW in December last year. The firm may increase purchases or its own generation in coming months to cover for lower hydro stocks of storage units of Euas. Argus Turkish OTC assessments Buy Sell ± TL/MWh Week ahead nc February March April nc Q nc Q nc Q nc Q nc nc Rolling 52 weeks nc conversions from TL/MWh Week ahead February March April Q Q Q Q Rolling 52 weeks Turkish base load index TL/MWh February Turkish Exist day ahead TL/MWh Base load Page 17 of 33

18 NEWS EU delays XBID platform launch by three months The EU has pushed back the launch of its planned XBID intraday cross-border power coupling platform by around three months to 12 June. The delay will allow "additional testing to be undertaken to ensure XBID's robustness", according to exchange Epex Spot and its transmission system operator partners. Markets scheduled for inclusion in XBID's launch will now be able to participate in two trial periods on 26 February-2 March and for 14-May to familiarise themselves with the platform. XBID was initially due to enter into force by the end of September 17, but its start-up was postponed to the first quarter of this year. The delay was the result of technical difficulties, related to the design of suitable methodologies to handle transmission loss charges while co-ordinating deliveries across multiple bidding zones. The new launch date affects only the first wave of participating power markets, or Local Implementation Projects (LIPs). These LIPs cover Austria, Belgium, France, Germany, the Netherlands, Portugal, Spain, Scandinavia and the Baltic region. The second group of countries including the UK and Switzerland will join XBID in spring or early summer 19, unchanged from the previous schedule. XBID is intended to match orders in one bidding zone with similar orders in others. German parties detail energy policy plans Germany s CDU, CSU and SPD in their working group meeting on energy policy, agreed to introduce a minimum quote in renewable energy auctions for projects located in south Germany and to work with France on CO2 pricing proposals. The working group drafted the energy policy, climate protection and environmental policy section of a potential coalition agreement between the CDU, CSU and the SPD today. The internal draft paper, seen by Argus, largely backs the agreement on energy policy, which the three parties reached during exploratory coalition talks, but added further details on the potential partners plans to decarbonise the German energy sector and wider economy. Renewable energy and storage The working group agreed to introduce a minimum quota in renewable energy auctions for projects based in the south of the country. Expansion the wind sector in particular has so far been much stronger in north and east Germany, contributing to internal grid bottlenecks. Special rules citizen initiative projects will be replaced with other concepts to encourage a wide range of participants in onshore wind tenders. Citizen initiative projects dominated onshore auctions held last year. This prompted concerns that Germany s wind power expansion will slow in 19-, as such projects require a permit to participate in the tenders and have 54 months to come on line, compared with a 30-month deadline for all other projects. The parties will hold special auctions to bring a combined 8GW in onshore and offshore wind and solar photovoltaic (PV) capacity on line within the next three years should they renew their coalition. They would shelve an obligation for power storage facilities to pay grid fees twice when power is drawn from the grid to store it and when electricity is fed back to the grid. Power storage facilities will no longer be treated as consumers, and will only have to pay grid fees when feeding into the grid. This could increase the profitability of pumped storage power plants and other power storage facilities that have been under pressure in recent years. The parties will review the levy and taxation system on various energy sources with the aim to encourage so-called sector coupling the electrification of the transport and heating system. Levies and taxes for non-exempt electricity consumers are hampering sector coupling, as taxes on other fossil fuels are generally much lower. Climate protection The working group paper added little more detail on which climate protection measures the three parties will implement should they renew their coalition. The parties lack the courage to clearly commit to a phase-out from lignite and coal-fired generation and to introduce CO2 pricing, encouraging low-carbon power production, the Green Party s Oliver Krischer said. Germany and France will work together on implementing the Paris accord from 15 and will draw up a joint proposal on CO2 pricing, the working group paper said, without detailing the nature of potential plans. The parties also reiterated their long-held positions that the EU emissions trading scheme (ETS) is the main instrument to encourage decarbonisation, pledging to lobby at an EU level to strengthen the scheme. The draft paper confirms that the parties will not commit firmly to immediate lignite or coal-fired plant closures in Page 18 of 32

19 NEWS an effort to meet a national target for a 40pc reduction in Germany s overall greenhouse gas (GHG) emissions against a 1990 baseline. A commission will instead be tasked to come up with measures to reduce the gap to the target as much as possible, while a plan to exit from power sector lignite and coal burn should also be drawn up by the end of this year. This plan should include an exit data for lignite and coalfired generation, the parties agreed. Crucially, they will embed Germany s target to reduce its GHG emissions by at least 55pc by 30 into national law should they decide to renew their coalition. This includes sector targets for 30, which the current caretaker government agreed on in 16. The energy sector will have to reduce its GHG emissions by 50pc in 30 against 14 levels, suggesting significant political headwinds against coal and lignite-fired power generating in the next decade, but limited additional measures if any on that front in the next 2-3 years. Formal coalition talks are scheduled to conclude on 3-4 February, with the aim of having a new government in place by Easter. The SPD party will allow members to vote on whether they should enter a coalition government with the CDU-CSU. Germany 'needs' carbon price A carbon price for Germany s non-emissions trading scheme (ETS) sectors is essential, a senior official at the economy and energy ministry told delegates at the annual German heating sector conference in Berlin this week. But the political parties now negotiating to form a new federal government, might not have the strength for such a policy measure, the ministry s energy policy, heat and efficiency head, Thorsten Herdan, said. Herdan pointed out the difficult negotiations between chancellor Angela Merkel s CDU and CSU group and the SPD, and the Bavarian state elections to be held in the spring, which are putting Bavaria s CSU under pressure. The most contentious energy issues in the coalition negotiations, apart from a possible carbon price for the non-ets sectors, are the issue of coupling the sectors of power, heating and transport on the basis of renewable sources, or sector coupling, and the long-standing question of how to boost energy-focused refurbishments of buildings, Herdan said. Herdan urged the coalition partners to look into the charges and levies on power. German households now pay about 42/MWh for gas, and about 240/MWh for power, makes electricity uncompetitive, and thwarts any attempts at sector coupling, Herdan said. Every energy minister will fail, if nothing is done about the charges and levies on power, Herdan said. What Germany must do to succeed in its energy transition and meet its climate targets is dramatically reduce its energy consumption of 2,500 TWh/yr, extend the current 150 TWh/yr of renewable power generation in a way that is as synchronised with the grid as possible, and import renewable energies, whether as power or as gas, Herdan said. Ideas of energy self-sufficiency are absurd, Herdan said. And he called for energy infrastructure to be viewed as a whole, encompassing power, gas and heating grids and electric vehicle charging infrastructure. The CDU, CSU and SPD's working group on energy negotiated today. While the potential coalition partners pledged to reform the levy and taxation system on various energy sources, they remained vague on the scope and timeline for such reforms. No need for power-to-gas Herdan rejected suggestions to make more use of the power-to-gas (PtG) technology. Right now we do not need power-to-gas, he said. Germany has insufficient excess power to use for PtG: We have no excess renewable power, rather we have too little, which cannot even be transported to customers, Herdan said. Renewable power should be used to replace coal-fired generation, rather than contribute to the hydrogen sector, he said. Something different would be to build offshore wind farms with no grid connection, to produce hydrogen that in turn could be used for the process industry or as a transport fuel. This could be tested in research projects, Herdan said. Subsidising the energy-focused refurbishment of buildings through tax breaks is a particularly contentious issue, as federal states have in past years repeatedly refused to accept the loss in tax receipts. The main question now is whether the tax breaks which are generally regarded as by far the best investment incentive in high-tax Germany will come in addition, or as a replacement, to existing support programmes for efficient or renewables-based heating systems. Herdan is optimistic that the coalition partners will realise the urgent necessity to do something about the heating sector, which accounts for about half of Germany s energy consumption. EdF proposes French nuclear shutdowns from 29 French state-controlled utility EdF disclosed its suggested timeline for nuclear power station shutdowns yesterday. Page 19 of 32

20 NEWS EdF put forward the proposal as part of efforts to reduce the share of nuclear power in the French energy mix, Philippe Sasseigne, head of the company s French nuclear plants, said. The timing of the closures would coincide with EdF s 900MW capacity reactors reaching 50 years of age. The goal of reducing nuclear s share in France s energy mix to 50pc from around 75pc now was originally put forward by the 15 energy transition law. The French government recently announced that the timeline for the reduction would be defined in its revised multi-year energy programme (PPE), to be published later this year. EdF said it would conform to the PPE determined by the government. The government reconfirmed this month the closure by the beginning of 19 of EdF s 1.7GW Fessenheim nuclear plant, to ensure that France does not exceed its 63.2GW nuclear cap when the new 1.6GW Flamanville 3 reactor starts up. And the French ministry of ecology and social transition on 29 January launched its EnRciT measure, earmarking mn ($12.45mn) of investment to support citizen renewables projects with a view to doubling renewable energy production by 30. The 15 energy transition law envisaged a 40pc share of renewable energy in the French energy mix by 30. Spanish snowfall could lower gas, coal generation Higher snowfall in the mountainous area of northern Spain could reduce demand for gas and coal-fired generation, once the snow melts and hydropower reserves rise. Snow reserves in the region totalled 1,478 cubic hectometres (hm³) for the week ending on 28 January, the latest data from Spain's environment ministry show. That is 17pc higher compared with the same period last year and 46pc above the five-year average for this period. Strong snowfall in the area is expected to continue in the coming days. Domestic meteorological agency Aemet has issued a warning notice of above-average snowfall over four days starting on 1 February. Snow cover in these regions is forecast to reach up to 50cm, Aemet said. Spanish hydropower stocks increased for the eighth consecutive week last week, reaching a similar level to the same period in 17. Above-average rainfall in the hydrointensive region of northwest Spain where most of the hydropower plants are located in recent weeks has supported inflows to reserves. Generation from gas and coal-fired plants was significantly stronger last year as a result of depleted hydropower stocks. And production from combined-cycle gas turbine (CCGT) plants is expected to be lower this month compared with last year, preliminary data from transmission system operator REE show. Gas-fired generation is forecast to total 2.29TWh in January, down by 22pc compared with a year earlier, while coal-fired output is on track to stand at 3.03TWh, falling by 41.3pc. Higher hydropower generation forecasts year have been pressuring front-month and March power prices. February closed at 52.2/MWh yesterday. The price has lost around 2.80/MWh this year so far and is below the 57/MWh where the February 17 contract expired. The March price closed at 48.45/MWh yesterday, a 0.30/MWh decline from the previous session. Greek regulator lowers Nome volumes Greek energy regulator RAE has reduced the volumes to be offered in the first two Nome auctions this year following market operator Lagie s proposal earlier this month. The first auction, due to take place on 7 February, will offer 400MW for delivery over 12 months from 1 March. The second and third auctions will also offer 400MW, with one for delivery over June 18-May 19 due to take place on 18 April and the third to take place on 18 July for delivery for 12 months from September 18. The fourth auction, due to take place on 17 October, will offer 511MW for delivery over December 18-November 19. The minimum price will be set at 32.05/MWh. The volumes are being increased to further reduce the share of state-controlled utility PPC in the retail market, after the 17 target was not achieved by the end of the year. PPC s share of the market stood at 85.3pc in December Announcement The holiday calendar showing which Argus reports are not published on which days is now available online Reference/Publishing-Schedule Announcement All data change announcements can be viewed online at Alternatively, to be added to the distribution list for all announcements, please datahelp@argusmedia.com. Page of 32

21 NEWS last year, although Lagie had been targeting a reduction to 75.2pc. Lagie had proposed increasing the volumes in the first two auctions to 500MW from an earlier plan to offer 215MW and 190MW in the first two auctions this year. PPC, which is mandated to sell power in the Nome auctions to increase competition in the market, sold 718MW in the most recent auction in October last year, with bids of /MWh from an initial price of 32.05/MWh. Spain plans cuts to regulated gas, power revenues Spain is attempting to cut regulated payments for gas and power transport and distribution, together with gas storage and LNG regasification. The measure would lead to an estimated reduction in revenues of up to 376mn/yr for companies in the gas sector alone. The ruling People s Party plans to introduce the cuts in a draft amendment to the 14 law on the regulated gas system, justifying them as a measure to control the widening shortfall between regulated gas system costs and revenues known as the gas tariff deficit, which is expected to rise to 1mn this year, from an estimated 90mn in 16. The amendment would allow the government to change the parameters for calculating payments to utilities two years before the end of the current regulatory period and would create a climate of legal uncertainty for investors in Spain s energy sectors, according to gas industry association Sedigas. The document includes estimates that the cuts in regulated revenues for gas distribution could total 285mn/yr to. It also estimates a reduction of 22mn/yr in payments to LNG regasification plants, 2mn/yr to underground storage facilities and 68mn/yr to gas transport assets. Planned cuts to regulated payments for power transport and distribution activities would total around 0mn, energy minister Alvaro Nadal said this afternoon in a congressional hearing. But he did not provide further details on this, which together with the amendment to gas payments are due to be registered in Spain s upper house or senate tomorrow. The cut in regulatory revenues, most of which would not have an impact until 19, would also provide the government with the leeway to lower gas tariffs to consumers ahead of municipal elections in June next year. Spain managed to control its ballooning tariff deficit in the power sector in 14 and has run a surplus in subsequent years, but the power system still has an accumulated deficit of some 23bn from over a decade of overspending on feedin tariffs for renewables and other subsidies. The regulatory changes will be introduced in a package of legal measures aimed at easing the effects of last year's drought, which pushed up electricity and gas prices, and are likely to be approved by the government majority in the senate. But t he government will have to garner approval from smaller parties for the measures when the legislation returns for final approval in the lower house, or congress, where it does not hold an outright majority. Romanian exchange switches timestamp to CET Opcom exchange has switched the timestamp for delivery profiles for all contracts on its OTC platform to central European time (CET), aligning with the 4MC market coupling scheme and potentially boosting liquidity on the day-ahead product on the platform. All product delivery profiles on the Opcom OTC platform are now quoted in CET, having previously been in eastern European time (EET). The order was published in Romania s official gazette on 29 January without specifying a date of implementation. The timestamp was changed for the next trading day, to the surprise of market participants, many of whom consider the communication by Opcom and regulator Anre to be inadequate. Traders have long lobbied for the change, as trading day-ahead power on the Opcom OTC platform in EET caused a mismatch with the Opcom 4MC coupled scheme with Hungary, the Czech Republic and Slovakia, which are aligned in CET. Anre said in 15 that the OTC day-ahead would not match the time zones for cost reasons, but would instead formulate a new product for the day ahead to account for the discrepancy. The aligned timestamps will make it easier to manage positions between the coupled spot markets and the day-ahead OTC market on Opcom, which could boost liquidity on the product. Contracts on Opcom s bilateral negotiation and continuous trading platforms were already quoted in CET, and the PCSU platform specifically for companies with a supply licence to buy power will remain in CET. Opcom has launched two other amendments to its trading process with the same order, which have been welcomed by market participants. The grace period given to participants to cancel trades executed by mistake on the OTC platform has been extended to 15 minutes from minutes. And the requirement for participants to confirm individual trades back to Opcom at the end of each trading day has Page 21 of 32

22 NEWS been removed, with Opcom now carrying out the necessary procedures itself. Ireland s Viridian requests closure of gas-fired plant Irish energy firm Viridian has asked to close both units at its 740MW Huntstown gas-fired power plant after it failed to secure a capacity market contract for one of two units. But it expressed interest in a recent proposal by regulator CRU to introduce transmission reserve contracts to meet local security supply issues, which could keep the plant online. Under the proposal the regulator could direct transmission system operator (TSO) Eirgrid to enter into a bilateral contract with a generator seeking to close a plant if deemed necessary for local security of supply. Owners of the contracting generator would not be eligible to participate in any other procurement process, and would be obliged to close the plant at the end of the contract. The 400MW unit 2 at the Huntstown gas-fired plant in north Dublin was one of seven units that did not receive capacity market contracts in Ireland s latest auction for the delivery period May 18-September 19. But the 340MW unit 1 at Huntstown plant did receive a capacity market contract. The plants are critical to the security of electricity supply in the Dublin area, Viridian said. Under the Irish grid code, generators with a capacity of 50MW or greater must give three years notice if they intend to close a generation plant. Viridian has requested an exemption to the grid code to close both units 1 and 2 at the Huntstown gas plant and has placed relevant staff at the plant on protective notice of redundancy for an initial period of eight weeks. The exemption request is being reviewed by CRU and the Irish transmission system operator Eirgrid. Eirgrid said it would work with CRU to ensure that if Viridian is to close both of its generation plants at Huntstown, it is done in a manner that does not affect security of electricity supply in Dublin". A total of 93 units were awarded capacity payments equal to a combined 7,774.2MW of derated capacity with a clearing price of 41,800/MW which was below the auction price cap of 123,190/MW while seven units with a total derated capacity of 1,240MW were unsuccessful. Irish state-controlled utility Electricity Supply Board and Northern Ireland electricity generator AES UK and Ireland also did not receive capacity market contracts and have said they could close their plants Kilroot coal-fired, Ballylumford B gas-fired, Agahad and Marina gas-fired plants as early as this summer. Turkish independent gas-fired generation drops Turkish independent gas-fired utilities reduced output in January compared with a month earlier despite weaker renewable generation as firmer regulated gas tariffs weighed. Gas-fired output by independent units fell to 7.1GW in January, after averaging 7.6GW last month. The decrease in generation was because of narrower spark spreads for utilities using more than 50pc of their requested demand from state-owned gas firm Botas. The firm raised regulated prices for independent units in the past two months and started selling gas at higher prices for utilities demanding more than 50pc of their requests for 18. Independent gas-fired production in the second half of the month fell to 6.9GW, from 7.4GW on 1-16 January, probably owing to units using most of their demanded gas. The front-month spark spread for a 55pc-efficient plant was at lira/mwh ($12.46/MWh), which was at a TL3.75/MWh premium to the dark spread for a 40pc-efficient unit. But spark spreads for gas-fired plants using more than 50pc of their demand up to 70pc would be at TL17.95/MWh. Imported coal-fired generation picked up in line with weaker renewables to 7.6GW, up from 6.3GW in December. The 660MW Cenal imported coal-fired plant started at the end of last month. Aggregate gas-fired production was just 50MW higher on the month in January at 12.1GW, owing to stronger contributions from state-run utilities. Gas-fired output by state-owned Euas tripled to 2.5GW, in a bid to cover weaker storage hydro generation. The Exist spot averaged TL182.86/MWh in January, after clearing at TL155.82/MWh in December. Stronger demand and weaker renewables provided support to spot prices along with firmer regulated gas prices. Demand reached 34.8GW, against 34.4GW last month. Renewable generation fell by 1GW to 8.5GW. Italian Terna demand-side auctions undersubscribed Italian grid operator Terna awarded a further 12MW in the auctions for demand-side management in the ancillary market service (MSD) but this represents just 3pc of available capacity. Terna allocated the capacity out of a total offered capacity of 423MW for virtual units located in the north and centre-north zone of Italy for the 1 February to 31 March Page 22 of 32

23 period. Enel Produzione received the largest volume with 7MW, followed by Axpo Italia with 4MW and Eviva with 1MW. The average price was around 30,000 MW/yr assigned on a pay-as-bid basis, equal to the auction's maximum premium. Terna offered a total capacity of 500MW over 15 January 31 March for virtual units located in the north and centre-north zone, allocating 77MW during the first auction. The project allows the MSD participation of virtual consumption units (UVACs) of a minimum 1MW capacity able to respond to requests from the grid to consume for at least three consecutive hours during 14:00-:00 (CET) (13:00-19:00 GMT) from Monday to Friday. Companies committed not to offer bids higher than the strike price, which was set at 400/MWh, Terna said. While Terna had previously said that a third auction will be organised for the March period with the remaining capacity which should be 411MW just a total of 89MW has been assigned until now, less than 18pc of entire capacity. Demand-side auctions are structured "in a way that is not interesting for the market", Italian solar association Italia Solare said recently. A similar position was expressed by a group of Five Star Movement s (M5S) senators earlier in October who stated that these kind of projects are limited and substantially useless. The grid operator previously offered the same amount of capacity for 19 June 30 September 17, auctioning a total of 86MW. The auctions were part of a pilot project which allowed the participation of demand in the MSD and followed a decision by energy regulator Arera to open dispatching services to new technologies that were excluded from the ancillary market service. Terna also launched another pilot project for distributed generation in July. Italian capacity market could 'fail to match' targets Italy s proposed capacity market mechanism is likely to miss its target in delivering security of power supply, Italian independent power producers association Energia Concorrente president Giuseppe Gatti said. The annual premium cap of,000/mw is too tight, Gatti told Argus. This, combined with the risk of a penalty in case of plant unavailability, will discourage a significant share of national capacity from taking part in the scheme, thereby challenging the system security of supply, he said. Only a bid cap over 30,000/MW would be sufficient to cover variable costs of open-cycle gas turbine (OGGT) plants which Italy chose as reference technology Gatti said. The association s analysts estimate that the risk of having to pay a penalty in case of a plant outage will be around,000/mw a week, Gatti said. This would limit the participation not only for small generators for whom the risk is much higher but also for big producers, as these would keep a share of capacity free from contract obligations for eventual back-up, he said. And the introduction of a strike price, unless very high, will create market distortions. As prices provide signals according to efficient resource allocation, a strike price simply should not exist, or it ought to be very high, Gatti said. A strike price of 250/MWh proposed for the first implementation period could be appropriate, while the 125/MWh planned for the full implementation period would be too low, he said. The Italian thermal sector has experienced a loss in profit margins and is struggling to make a return on investments. This, combined with increasing renewable energy generation, has generated oversupply. In such a context, the capacity market remains crucial for guaranteeing the double role of base-load and back-up suppliers, Gatti said. The overcapacity has fallen to around 65GW from 80GW registered a few years ago after GW of obsolete plants were decommissioned, while an additional inefficient 5-6GW will be closed shortly, Gatti said. Italy's total installed capacity stands at around 1GW. The country aims to introduce its auction-based scheme in 18 and an official response from the European Commission is scheduled for 7 February. If there are no further delays, the scheme could be implemented straight after the official response, with first auctions to be held in spring and the first delivery to take place as soon as 1 July, Gatti said. Nordic hydropower stocks narrow deficit Hydropower reserves in the Nordic region decreased their deficit to the long-term average last week. Total stocks declined by 2.7 percentage points to 58.8pc of total capacity. The deficit to the average level of reserves over the period narrowed to 1.2 percentage points from 1.5 the week prior. Stocks last week remained comfortably above stocks from this time last year, which were just 53.4pc of total capacity. But they were also well below the levels recorded the same week in 16, when stocks were 65.6pc. Stocks declined by 2.8pc of capacity in both Norway and Sweden. Finland s levels were down by only 2pc, but its total capacity is low in comparison with the two other countries in the region. Precipitation levels during the week were comfortably higher than during the previous week, easing the decline in hydro stocks. Total precipitation in the southern Norwegian city of Bergen, where runoff feeds heavily into underground reservoirs, was 91.7mm, sharply higher than the 27.5mm of Page 23 of 32

24 precipitation from the previous week. But because precipitation may predominantly be in the form of snow over the winter, the resulting contribution to hydro reservoirs may not be immediate. The slower drawdown rate last week was also helped by strong generation from wind. In Denmark, which neighbours Sweden, total power output from wind in week 4 was 303GWh, more than double the total from the prior week and an increase of more than a third from the week before that. Wind generation across central Europe has been robust in recent weeks. current week, or week 5, so far indicates that the deficit to the long-term average may continue to narrow. Precipitation in the first three days of the week is already 64.2mm, more than twice the total in week 3 and approaching last week s figures. And wind generation over the same period in Denmark reached some of the strongest levels seen all January. Nordic hydro stocks in week 4 Pc of capacity 0 18 Long-term average Week 1 Week 18 Week 35 Week 52 In part thanks to the stronger contribution from wind, power production in the Nordic region fell week on week and was the lowest since the first week of the year. Production totalled 9.46TWh in week 4, down from 9.59TWh in week 3. Power consumption in the region also fell. It declined to 9.1TWh in week 4 from 9.42TWh the week prior, or week 3. Looking ahead, the outlook for hydro reserves during the Upcoming events in the power market Factors to watch in the next seven days. Power industry calendar Event Date Time Categories UK National Grid supply margin forecast published Thursday 1 February 18 na UK, UK and Ireland Fortum 17 results Friday 2 February 18 na Corporate Terna publishes outage data Friday 2 February 18 na Italy Slovak reservoir data published Monday 5 February 18 na CEE and SEE, Central and South Eastern Europe Romanian reservoir data published Monday 5 February 18 na CEE and SEE, Central and South Eastern Europe UK T-4 capacity auction Tuesday 6 February 18 na UK French hydro data published Tuesday 6 February 18 na CWE, France Netherlands Belgium Spanish hydro data published Tuesday 6 February 18 na Iberia Nordic hydro data published Wednesday 7 February 18 na Nordic Page 24 of 32

25 Technical indicators French front month base load Hungarian front month base load positives negatives positives negatives Jan Jan Jan Jan Jan Jan 18 German front month base load Italian front month base load positives negatives positives negatives Jan Jan Jan Jan Jan Jan 18 German year ahead base load UK front month base load /MWh positives negatives positives negatives Jan Jan Jan Jan Jan Jan 18 Page 25 of 32

26 renewable power forecasts Wind power forecast (31 January 18:00 UTC) 01 Feb 02 Feb 03 Feb 04 Feb 05 Feb 06 Feb Area Base Peak Base Peak Base Peak Base Peak Base Peak Base Peak Europe 70,882 73,484 57,369 54,619 43,063 42,066 34,823 31,984 24,576 23,498 31,450 32,777 Germany 24,054 25,007 15,936 14,619 4,235 3,756 7,389 7,748 5,019 4,116 4,628 4,554 DE-Grid 50Hertz 6,187 6,165 4,909 4, ,587 1,591 1, DE-Grid Amprion 4,008 4,259 3,255 2, , ,535 1,162 DE-Grid EnBW DE-Grid Transpower 13,306 14,031 7,342 7,082 2,318 2,078 4,898 5,296 2,516 2,8 2,739 3,041 Austria ,524 1, Belgium 1,234 1,172 1,305 1, ,028 1,150 Denmark 2,834 3,069 1,362 1, ,062 1,540 1, Finland France 4,265 4,245 4,004 4,554 2,890 2,682 2,894 2,837 2,443 2,334 1,845 2,048 Greece , Ireland 1,763 1, ,761 1, ,225 1,073 Italy 3,471 3,693 4,787 4,771 4,715 4, ,982 2,386 Netherlands 2,446 2,370 2,189 2, ,040 1, ,214 1,494 Norway Poland 1,904 1, ,222 1,227 1, Portugal 2,980 3,678 3,557 3,931 3,798 3,479 3,099 2,700 2,864 3,095 2,985 2,950 Romania 1, ,5 2,666 1,709 1, Spain 6,985 8,6 11,611 11,669 11,305 9,744 7,270 5,827 5,356 5,445 6,151 6,418 Sweden 3,222 3,240 1,502 1,159 1,143 1,132 1,737 1, UK 11,708 11,861 6,026 4,697 4,887 5,945 2,705 1,831 2,845 3,160 7,903 8,179 Wind power forecasts for countries with >400MW installed capacity Solar power forecast (31 January 18:00 UTC) 01 Feb 02 Feb 03 Feb 04 Feb 05 Feb 06 Feb Area Base Peak Base Peak Base Peak Base Peak Base Peak Base Peak Germany 1,619 3,228 1,166 2, ,406 1,069 2,134 1,358 2,703 1,495 2,977 DE-Grid 50Hertz 596 1, DE-Grid Amprion DE-Grid EnBW DE-Grid Transpower 532 1, , ,024 Czech Republic France , ,075 Italy 734 1, , ,565 1,153 2,243 1,245 2, ,792 Spain 559 1, , , , ,508 German wind power forecast GWh German solar power forecast GWh Peaks Off-peaks Feb 02 Feb 03 Feb 04 Feb 05 Feb 0 01 Feb 02 Feb 03 Feb 04 Feb 05 Feb Selected wind and solar power forecasts from spotrenewables (a product of EuroWind GmbH). Visit for complete forecasts for 29 European countries. Page 26 of 32

27 spark spreads Spark spread calculations Spark spreads for various thermal efficiencies are calculated from Argus outright fuel, CO 2 emissions and electricity prices, and are not assessments based on actual spark-spread trades. Fuel, emissions and electricity prices are taken from the Argus European Electricity, Argus European Natural Gas, Argus Coal Daily International, Argus European Products and Argus European Emissions Markets daily reports. A selection of spark and dark spreads are published in the print report. A full range of spark and dark spreads can be accessed through Argus Direct. Please contact sales@argusmedia.com to arrange access. UK ETS and CSP adjusted spark and dark spreads /MWh NBP 55% ARA Coal 38% Contract base load peak load base load peak load Working day ahead February March April May June July Q Q Q Q Summer Winter Summer Winter UK unadjusted spark spreads /MWh NBP 49.13% Contract base load peak load Working day ahead February March April May June July Q Q Q Q Summer Winter Summer Winter UK front-month peak-load spark vs dark UK calendar-year base-load dark /MWh Gas 55% Coal 38% 25 ETS adjusted unadjusted CSP adjusted hhhh hhhh Dec 29 Dec 16 Jan 31 Jan Dec 29 Dec 16 Jan 31 Jan Page 27 of 32

28 spark spreads German ETS adjusted spark and dark spreads NCG 55% Gaspool 55% ARA Coal 38% Contract base load peak load base load peak load base load peak load Working day ahead February March April May June July Q Q Q Q Q na na German unadjusted dark spreads ARA Coal 38% Contract base load peak load Working day ahead February March April Q Q Q Q Q19 na na Q German day-ahead base-load spreads German year-ahead adjusted spark and dark 30 adjusted gas 55% adjusted coal 38% 4 Coal 38% Gas 49.13% hhhh hhhh Dec 29 Dec 16 Jan 31 Jan -6 8 Nov 5 Dec 4 Jan 31 Jan German month-ahead base-load sparks German month-ahead peak-load sparks Coal 38% Gas 49.13% 5 hhhh hhhh Oct 29 Nov 2 Jan 31 Jan 31 Oct 29 Nov 2 Jan 31 Jan Page 28 of 32

29 spark spreads Dutch ETS adjusted spark and dark spreads TTF 55% ARA Coal 38% Contract base load peak load base load peak load Working day ahead February March April Q Q Q Dutch front-month base-load spreads Coal 38% Gas 49.13% hhhh 1Q Oct 29 Nov 2 Jan 31 Jan Dutch front-month peak-load spreads Dutch day-ahead peak-load spark vs dark 35 Coal 38% Gas 49.13% 40 adjusted gas 55% adjusted coal 38% hhhh hhhh Oct 29 Nov 2 Jan 31 Jan 0 12 Dec Dec Jan Jan 18 European front-month base-load dark Germany Italy UK Italian ETS adjusted spark and dark spreads PSV 55% ARA Coal 38% Contract base load peak load base load peak load February March Dec 29 Dec 16 Jan 31 Jan hhhh April Q Q Q Q Page 29 of 32

30 spark spreads French ETS adjusted spark and dark spreads ARA Coal 38% Peg Nord 55% TRS 55% Contract base load peak load base load peak load base load peak load Working day ahead February March April Q Q Q Q French front-month base-load spreads French front-month peak-load spreads 40 Coal 38% Gas 49.13% 70 Coal 38% Gas 49.13% hhhh 40 hhhh Oct 29 Nov 2 Jan 31 Jan 31 Oct 29 Nov 2 Jan 31 Jan NCG vs Peg Nord front-month base-load spark French calendar-year peak-load dark 25 Germany NCG gas 55% France PEG Nord gas 55% 30 ETS adjusted ARA coal 38% unadjusted ARA coal 38% hhhh 22 hhhh Dec 29 Dec 16 Jan 31 Jan Dec 29 Dec 16 Jan 31 Jan Page 30 of 32

31 weather data European weather - Departure from normal temperatures C Location 1 Feb 2 Feb 3 Feb 4 Feb 5 Feb Precipitation Avg ± normal* Avg ± normal* Avg ± normal* Avg ± normal* Avg ± normal* 5-day 15-day (mm) UK Aberdeen Dyce UK Manchester Hulme UK London Heathrow Norway Bergen Florida Norway Oslo Blindern France Paris Orly The Netherlands Amsterdam Schiphol Germany Essen Germany Hamburg Fuhlsbuttel Germany Berlin Tempelhof Germany Dusseldorf Germany Nuremberg Poland Warsaw Okecie Czech Republic Prague Ruzyne Hungary Budapest Lorinc Serbia Belgrade Surcin Romania Bucharest Imh Spain Madrid Barajas Italy Milan Linate Greece Athens Airport Bulgaria Sofia Observatory Turkey Istanbul Ataturk *normal means cleaned -year average (04-13 inclusive) Ensemble forecasts (12.00 GMT) provided by Speedwell Weather Weather derivatives - 26 Jan 18 - Argus weekly assessment HDD ( C) -year Location Month Bid Offer Mid +/- average CAT ( C) Mid vs -year average Bid Offer Mid +/- -year average Mid vs -year average Amsterdam/Schiphol Jan Feb Essen Jan Feb London/Heathrow Jan Feb Paris/Orly Jan Feb Note HDD (basis 18 C) apply October - April, CAT apply May - September, -year average data supplied by Speedwell Weather Weather derivatives - 26 Jan 18 - Argus implied daily average temperatures HDD ( C) CAT ( C) Location Month Bid Offer Mid +/- -year average Mid vs -year average Bid Offer Mid +/- -year average Mid vs -year average Amsterdam/Schiphol Jan Feb Essen Jan Feb London/Heathrow Jan Feb Paris/Orly Jan Feb Daily values are derived from the weekly assessment. HDDs are divided by the number of days in the month and then subtracted from 18 C to give a daily value while CATs are divided by the number of days in the respective month to give the daily value. Ensemble averages and cleaned weather data all supplied by Speedwell Weather Limited. For more information visit: Page 31 of 32

32 The most up-to-date European Electricity methodology is available on Argus European Electricity Argus European Electricity Methodology Argus uses a precise and transparent methodology to assess prices in all the markets it covers. The latest version of the Argus European Electricity Methodology can be found at: For a hard copy, please info@argusmedia.com, but please note that methodologies are updated frequently and for the latest version, you should visit the internet site. METHODOLOGY AND SPECIFICATIONS GUIDE ARGUS EUROPEAN ELECTRICITY Contents: Methodology overview 2 Assessment methodology 5 Markets covered 6 The UK 6 Germany 6 Austria 7 Switzerland 7 France 7 The Netherlands 7 Spain 7 Italy 7 The Czech Republic 7 Slovakia 8 Poland 8 Hungary 8 Serbia 8 Romania 8 Turkey 8 Bulgaria 9 Greece 9 Argus weather derivative assessments 9 Generating costs and spark spreads 9 LAST UPDATED: APRIL 14 Argus direct Web Mobile Alerts Argus Direct is the next generation platform from Argus Media. It is the premium way to access our reports, prices, market insight, fundamentals data and markets. argusmedia.com/direct Announcement Argus extends and completes second annual Iosco assurance review Argus has now completed its second external review of its generating fuel and coking coal price benchmarkets, including those for natural gas and coal markets. The review was carried out by professional services firm PwC. An annual independent and external review of non-oil benchmark prices is encouraged by international regulators under Iosco s Principles for Oil Price Reporting Agencies (the PRA Principles). For more information and to download the report visit our website Argus European Electricity is published by Argus Media group Registered office Lacon House, 84 Theobald s Road, London, WC1X 8NL Tel: sales@argusmedia.com ISSN: Copyright notice All rights reserved All intellectual property rights in this publication and the information published herein are the exclusive property of Argus and/or its licensors (including exchanges) and may only be used under licence from Argus. Without limiting the foregoing, by accessing this publication you agree that you will not copy or reproduce or use any part of its contents (including, but not limited to, single prices or any other individual items of data) in any form or for any purpose whatsoever except under valid licence from Argus. Further, your access to and use of data from exchanges may be subject to additional fees and/or execution of a separate agreement, whether directly with the exchanges or through Argus. Trademark notice ARGUS, the ARGUS logo, ARGUS MEDIA, Argus European Electricity, other ARGUS publication titles and ARGUS index names are trademarks of Argus Media Limited. Visit for more information. Disclaimer The data and other information published herein (the Data ) are provided on an as is basis. Argus and its licensors (including exchanges) make no warranties, express or implied, as to the accuracy, adequacy, timeliness, or completeness of the Data or fitness for any particular purpose. Argus and its licensors (including exchanges) shall not be liable for any loss, claims or damage arising from any party s reliance on the Data and disclaim any and all liability related to or arising out of use of the Data to the full extent permissible by law. Publisher Adrian Binks Chief operating officer Matthew Burkley Global compliance officer Jeffrey Amos Commercial manager Jo Loudiadis Managing editor Jim Nicholson Editor Eleanor Green Tel: eer@argusmedia.com Customer support and sales: Technical queries technicalsupport@argusmedia.com All other queries support@argusmedia.com London, UK Tel: Astana, Kazakhstan Tel: Beijing, China Tel: Dubai Tel: Moscow, Russia Tel: Rio de Janeiro, Brazil Tel: Singapore Tel: Tokyo, Japan Tel: Argus Media Inc, Houston, US Tel: Argus Media Inc, New York, US Tel: Power illuminating the markets