SocGen curbs German forward power price outlook
* Price outlook lowered for German Cal '13 average
* Sluggish demand seen keeping Europe prices range-bound
* German renewable power boom adds to supply
FRANKFURT, Nov 21 (Reuters) - Societe Generale cut its estimate for German forward power prices on Wednesday, saying Europe's economic outlook was worsening and renewables were taking a growing share of the energy mix.
German 2013 baseload, the most liquid forward contract in European wholesale electricity trading, is now expected to average 49.8 euros ($64.0) a megawatt hour in 2012, down from an estimate of 51.0 euros in a September research note, the bank said.
"...we have tempered our forecasts to account for more recent price action, in turn stemming mostly from a worsened economic outlook for Europe and from a stronger contribution of renewables," it said.
The benchmark Cal '13 contract has repeatedly hit a year-low of 46.5 euros in recent over-the-counter trading, touching that level again on Wednesday, against a high of 53.3 euros in severe winter conditions in February.
Year-ahead power has not been this low since November 2010.
German Cal '14 baseload, currently at 47.5 euros OTC, was seen by the bank at an average 50.2 euros/MWh throughout 2013, down from 51.7 euros, which was assumed to be the 2013 average in the September note.
Corresponding contracts in France, a less liquid market, carry a premium over those in Germany, reflecting a tighter supply of the nuclear power on which France relies. Germany has developed a broader mix of power generation sources.
SocGen said strong economic headwinds would limit gains in power prices over the next two years but declines would also probably be limited too, unless the economic crisis deepened.
Dragging on prices are lower fuel input costs for generators, the result of cheaper coal and carbon prices, which depress sale prices.
Renewables are also making a big contribution to supplies, especially in Germany.
This is hurting revenues of thermal power stations by reducing the amount of time a relatively inefficient plant might be operated. Green power is treated preferentially and must be bought whenever it is produced.
Power producers such as utility E.ON have been responding to the weak price scenario by abandoning thermal plant projects and idling capacity.
Last week E.ON said it would shelve 1 gigawatt (GW) of capacity at two blocks, Irsching 3 and Staudinger 4, and would only continue running them as reserves against a fee.