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Moody’s outlook on electricity prices through 2020

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World Coal,

Moody expects wholesale prices will stay weak through 2020, reflecting weak demand for electricity against the backdrop of a subdued macro-economic environment, increasing energy efficiency and over capacity. The company anticipates commodity prices will be stable.

Paul Marty, Moody's Vice President and Senior Analyst, said: "We expect the price of carbon allowances to remain low in the medium term in the absence of additional changes to the current framework. The current oversupply of allowances under the EU Emissions Trading Scheme (ETS) is likely to persist until at least the middle of the next decade despite the planned start in 2019 of the Market Stability Reserve (MSR), designed to reduce the surplus."

Marty added: "Our estimate is for the CO2

The report indicated that the United Nations Conference on Climate Change (COP21) that is to happen later this year could confirm an increasing global agreement of stricter controls on emissions. EU governments may prevent a sharp step change in the ETS mechanism and therefore in the CO2 price. In a hypothetical situation of higher CO2 prices, each market would be effected differently by power prices. Coal-drive market that have greater carbon intensity than gas market would be affected the most.

Moody noted that almost all European utilities would benefit from increased CO2 prices with a small number of exceptions. Yet the lowest CO2 emitters with hydro or nuclear generation, such as Electricite de France, Verbund AG, Fortum Oyj and Statkraft AS are best positioned to accommodate government policies supporting greenhouse gases reduction. The highest CO2 emitters with lignite or coal, such as RWE AG and Polish utilities are in a worst position.

The full report titled "Europe's Electricity Markets: Unregulated utilities would benefit from higher CO2 price, but no game changer in sight yet" is available on

Edited from Press Release by Harleigh Hobbs

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