GERMAN POWER:Weekend stable at 5-week-high, at discount to France

London (Platts)--4Mar2011/858 am EST/1358 GMT

German weekend power prices Friday rose to a five-week high, but still traded at a sharp discount to their French counterparts as below average temperatures increased demand in France during reduced cross-border flows for grid balancing reasons, a trader said.

Cross-border flows between France and Germany will be cut by 1 GW Saturday, according to CASC, a joint cross-border service company established by the CWE region's TSOs.

Baseload power for delivery this weekend was last heard at Eur50.25/MWh by 12:00 London time, up just 35 euro cents from Thursday's close, but at its highest since January 28, Platts data shows. Saturday last traded at Eur51/MWh, while Sunday was heard at Eur47.50/MWh.

EPEX Spot closed the baseload price for Saturday at Eur48.41/MWh, almost Eur2 below OTC and Eur8 below its French equivalent.

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Baseload power for Monday delivery was last heard at Eur59.80/MWh, just 30 euro cents above where the Friday contract was last traded on Thursday, while peakload for Monday was 50 euro cents below Friday's price at Eur66/MWh.

"France was expected to be tight because of the colder weather, while the rise in wind should make Germany much more comfortable despite it," a trader said, adding that cross-border restrictions further emphasized the spread.

"The French can't get an extra 1,000 MW that's where the big spread on the exchange comes from."

Average wind power output was forecast at 5.5 GW Saturday and 6 GW Sunday, a market source said. Solar output was forecast to drop from peaks of almost 10 GW earlier this week. Germany's wind and solar capacity has risen well above 40 GW, more than twice the country's nuclear power capacity.

Nuclear and fossil capacity will drop 2.6 GW to 60.5 GW Saturday, but is forecast to recover to 63 GW Monday, EEX's transparency website shows.

Temperatures across Germany will remain below the seasonal average until at least the middle of next week with CustomWeather forecasting Dusseldorf at 3 degrees Celsius below on Saturday and 4 C below Sunday.

Further out on the prompt, week-ahead base was heard trading 75 euro cent higher at Eur54.75/MWh as temperatures forecast for next week will remain below average in Germany and most of France.

The near-curve continued to move higher on the back of low hydro levels and gas prices trading at a two-year high, with April base up 35 euro cents at Eur50.50/MWh.

Further forward, Cal 12 base rebounded 25 euro cents to trade at Eur53.20/MWh just before lunchtime.