Current heat waves across Europe leading the extreme demand for electricity and shortages in France, Italy and the UK. Domestic electricity consumption increased by 10% y/y in the past weeks due to the increasing usage of air-conditioning. The domestic grip operator, CEPS was forced by purchase electricity from abroad due to faults at some domestic power station. Note that NPP Temelin’s 1st block is closed for refuelling and the 2nd block was shutdown due to problem at the non-nuclear part.
Our view: Extreme hot weather and increasing usage of air-conditioning both in households and new office/supermarkets could double electricity demand above the normal levels driven by GDP growth. Also, the price of July’s baseload electricity increased by 4.8% d/d to EUR59.6/MWh yesterday in Germany. This should positively impact CEZ’s both 2Q and 3Q results.