The domestic electricity grid collapsed due to capacity overload due to extreme hot weather, which led to disconnection of several power plants and larger companies were ordered to reduce the uptake. The grid operator, CEPS called a state of emergency, which was called off after 23.00 CET. CEZ had its 8 blocks running without supplying electricity for a short time after re-connecting back into the grid. CEZ also said that it would halt its exports for Tuesday and Wednesday.
Our view:
The collapse confirmed presentation given by CEZ interestingly enough earlier on the day that the electricity demand/supply balance should deteriorate in the CEE region going forward. Obviously, the news is marginally negative to CEZ given the disconnection of its blocks for a while and halt of exports nevertheless it should stimulate the demand and price for electricity at its both upcoming auctions, virtual power plant and the subsequent wholesale electricity for 2007.