Nordic power under pressure

As the companies long-range outlook has shown, the risk for Cold, Wet and Windy (CWW) July is high during FSW years, after a dry and calm risk in May-June. The timing of the CWW shift was seen but the massive CWW seen in forecasts came in some days earlier than expected. We are up for a weather pattern test during 02-04 of July = if a failure to cause warmer, drier and calmer (WDC) path in forecasts then the risk for record wet and windy July is high. Hydro producers will be under pressure in July and thus water values will be low until they have control on the water and risk for peak reservoirs is called off. Cable constraints keep holding S-NO trapped – areas important for the SYS price. The bearish inflow risk I have talked about in N-SE can kick in into July and that will keep the pressure on spot and futures further into August, in line with super bearish NO. So far it is no clear bearish effect of the second-C19-wave, but it is to soon to see how it will affect the EU or the USA. When death rates start to increase we could see new lockdowns and closure of borders… For now, I keep my bearish thermal outlook, the Carbon rally based on speculations (not fundamentals…) is not bullish for me, a temporary bullish effect for NC through Germany… 

The mindset of the market

  • In June warm temps and dry weather resulted in high snow melting and gradual lower Hydbal
  • Delayed inflow peaked and record snow levels shrunk fast per day  – futures turned bullish on the hope of control on the water reservoirs and inflow into July
  • But, as clients of TradeWpower has been shown for months the dry risk for May-June is causing a wet risk for July-August
  • Into next week we will see if the CWW path verifies in full scale and that means many will have to change their outlook and correct their portfolios and strategies since hydbal could be back in +20 Twh territory (Eikon numbers…)


  • Hedging: I keep my suggestion: hedge 2021 – a hydbal surplus of +15 TWh at 1 of January 2021 and C19 suggest that sat tart of 2021 we will see lower prices. NC will disconnect Germany and betting on a cold and stable winter is high risk. It’s better to correct hedge at later stages and take som losses at trading rather than in all of your production.
  • Trading: Be carefully on bullish weather thinking until we see solid proof for a new WDC path and control on water reservoirs/inflow. Bullish Germany will next week, in case of massive CWW path, be washed out… I suggest waiting until we see the path into next week before thinking bullish on the weather for July and August

Weather Regime Model (WRM)

  • If 02-04 of July don’t cause solid WDC path, then next week forecasts will also be CWW
  • That means if we don’t see a turn in the Jet Stream and wind+precip to WDC territory we are up for a new week with massive CWW forecasts
  • This also means that July can be record wet and that August can follow a CWW path so weather risk is still high

Synoptic Confirmation

  • Models show CWW path (Gwh) in line with the Jet Stream and adjusted WRM signals
  • Change in the Jet Stream must be seen to verify a turn back to June weather = WDC path, but that has a low risk for now
  • The companies WRM shows the main path and be careful trading against the Jet and WRM signals as things are now
Up to about 13 of July = strong CWW territory


Jet ends less CWW, no clear WDC path is seen…


Low pressures keep developing. Low risk for solid WDC turn, just less wet and windy as indicated by some GFS Opr runs


No clear WDC path seen at endings – just less wet and windy, but around to above normal levels is seen for now

Synoptic Risk Analysis

  • The only period I can see that can shift the forecasts trend form CWW to WDC for next week forecasts is around 02-04 of July
  • In case of WDC path in Opr runs that is not a solid signal for drier, calmer and warmer weather
  • We need proof seen in EC ens mean = the Jet Stream must turn more into a calm and dry setup and the WRM must show a shift to WDC path later into next week
  • Only the Jet Stream can offset a WRM signal


  • As snow melting decreases causing less inflow rain will take over holding inflow above normal levels
  • N-SE still has a bearish risk and can turn SE1-2 water values very low into July in case of continuous CWW path
  • There is still significant snow left in mountains in N-SE and together with wind and rain that will pull N-SE spot down towards S-NO


Eikon – Refinitiv. Inflow was expected to go down/below normal levels into July given the warm and dry June, but the turn to CWW keeps inflow high. Colder temps will cause a calmer snow melting which will last into August – from mountain areas. Even if Inflow is falling mountain inflow in NO and especially SE is still high (still snow left high up…) and has a bearish risk = mountain reservoirs will fill up fast and thus must soon start to produce more… That affects all hydro stations down to sea level…

SE-Inflow risk


SMHI: The dry June is clearly seen over SE. But, the blue rivers down to sea level (far above normal levels of inflow) are caused by massive snow melting in mountain areas. There is still much snow left in N-SE and together with rain and wind, this will gradually be putting pressure on SE spot prices into July as mountain reservoirs will peak… Soon, restrictions in SE force them to produce more…

Water Values

  • Record low spot in S-NO has held the SYS price very low (high inflow – cables…)
  • More precipitation in S-NO will keep the pressure on S-NO spot prices and thus SYS price
  • N-SE is on to an S-NO situation with a continuous CWW path meaning that high levels of high altitude snow + rain will fill up mountain reservoirs. As they reach peak levels during the summer, they will have to produce causing a chain of production down to sea level
  • The risk for dips into negative territory is seen – that can be seen later on if we don’t verify a WDC path for the middle fo July and onwards
Eikon – Refinitiv. NO2 short term price outlook. Record low spot is forecasted and a dip into negative territory is seen at 5 of July. That can be seen more often if the weather pattern does not change…

Historical Hydbal vs SYS price

  • Based on Eikon’s Hydbal = at about +7 Twh, before the weather turned CWW,  I would agree that July and especially August would have been at 10-18 Euro range
  • Buts, as I have given my clients warning about the shift of weather, will take place into July = hydbal will climb again
  • Later next week observed (Eikon) + forecasted Hydbal = >20 Twh
  • Thus, given current market situation prices will be under pressure far into the autumn
  • Other market Players (EQ) is about 15 Twh wetter than Eikon – Refinitiv = higher downside risk into next week if we see massive CWW forecasts throughout the week


Eikon – Refinitiv. Hydbla vs SYS price: Based on hydbal around 7 Twh we are underpriced for > August futures. But next week forecasted Eikon hydbal  Obs+forecast) can be in surplus of +20 Twh territory and that will be bearish regardless of hydbal assumptions.

C19 – thermal power

  • Second C19 wave has a low impact for now and Fed money and other “market steroids” are holding everything bullish, for now
  • For me, this is just a dream of better times and not based on facts
  • There is still no confirmed vaccine and in case of rising death rates (USA+EU) and not just new infected (second C19 wave) we could see new lockdowns, travel restrictions and so on very fast
  • Carbon is a “speculative stock” so that can change fast – but technical experts points towards 30 Euro so how knows…
  • Oversupply (gas, oil, coal), lower consumption, sneaking effect of C19 overweight any bullish corrections = We are still in super bearish territory for 2021


  • Next EC46 will most likely be wet and windy for NC+UK, but we need to see how the wind is affected in Germany to verify proof for massive CWW path into August
  • CFSv2 is very dry for July and August, that is not what I see in my WRM, and also EC46 shows more hi-pressure pattern for C-EU
  • The models, even EC 14 ens mean is lagging the effect of the FSW and thus we see forecasts that adjust after the wet and windy weather like we did see that EC46 was wetter but kept running after EC14’s dry and calm path in June
  • MJO is still in CWW territory, but a shift to WDC phase 3-4 could be an indicator for a pattern change towards the middle of July
  • Thus, I keep my 2-month-old long-range outlook unchanged: hydbal at start of 1 of January 2021 at a surplus of >15 Twh, only a dry path in Nov-Dec can offset that…