Isra-Mart srl : German Power, Carbon Prices Rise to Highest in 19 Months

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Isra-Mart srl news:
German power and European Union carbon permits rose to their highest prices in more than 19 months as utilities prepare to hedge forward sales of electricity generated from fossil fuels.

German power for 2012 rose 0.8 percent to 60.55 euros ($86) a megawatt hour, the highest level since August 2009, according to prices from brokers compiled by Bloomberg. EU emission allowances for December rose 0.5 percent to close at 17.31 euros a metric ton on the ICE Futures Europe exchange in London, the highest price since May 2009.

German utilities will probably be buying back their presold nuclear power for the next two or three months, said Tschach Solutions GmbH, a supplier of data on carbon markets. Utilities likely will be seek board approval this week to buy back the power as regulators push for permanent closure of seven or eight German plants, said Ingo Tschach, managing director.

Traders are speculating that atomic energy will play a smaller role in Europe as utilities switch to coal and natural gas to generate electricity after Japan’s March 11 earthquake and tsunami triggered radiation leaks from the Fukushima Dai- Ichi plant.

As the utilities buy back the nuclear power, they will sell fossil-fuel electricity, pushing up forward prices for coal, natural gas and carbon permits, Tschach said today by phone and e-mail. The “total price effect of rebalancing power hedges to adopt to upcoming regulation will be in the order of 2 to 3 euros a ton” for carbon permits over the next three months.

The closed reactors will boost emissions by 35 million tons a year, and carbon prices probably will rise to 20 euros by June, Tschach said. The forecast assumes supply of 20 million tons of United Nations offsets a month in April, May and June, he said. Once they have board approval, the utilities will probably start hedging during the next few weeks, even before the permanent reactor closures are announced, he said. “To wait would be very costly.” German power rose 13 percent last April.