We analyzed the auction as arranged by APX-Endex. The auction will take place on 28 November 2012, and will sell the capacity for 2013/2014. Based on our assessment, KYOS believes € 4.00 is a fair price for a Standard Bundled Unit. This is a decrease of 49% compared to the fair value of the previous auction. The main reason for the decline is the reduced summer-winter spread.
The calculated full option value is based on a spot trading strategy including forward hedges, making it possible to secure most of the full storage value.
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News from 29 November:
The actual auction price ended at Euro 3.63. This is quite close to our assessment of 4.00 EUR/SBU, as published before the auction. In the previous auction (Feb-12) we estimated the value of the GasTerra storage to be 7.83, with an actual outcome of 6.28 EUR/SBU. That is a pretty large gap meaning we were of the opinion the storage was undervalued. Generally speaking we can conclude that the market has moved closer to KYOS’ assessment. The gap is now only 0.37 EUR/SBU.
Our overall assessment is lower than last time, and the auction outcome as well, because: a) the winter-summer spread (Q1 = winter minus Q3 = summer) has declined from 4.61 EUR/MWh to 2.29 EUR/MWh, and b) according to our analysis, spot volatility has gone down from 48% to 36%.
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