The price of electricity on European power exchanges yesterday recorded an unprecedented rise of more than EUR 140 per MWh to EUR 320 per MWh. A one-day spike drove the increase in natural gas prices of EUR 50, which accounted for EUR 100 per MWh in electricity.
Price movements on power exchanges indicate a trend. Still, they differ from the prices that buyers and sellers reach these days for long-term power supply agreements for the next year, according to Dejan Stojčevski, technical director of Serbian power exchange SEEPEX.
He said that these days the agreements had been reached at EUR 150 per MWh, while the price in Southeastern Europe is EUR 160 per MWh. Of course, it is not much of a consolation for companies as they pay about EUR 100 more than in March and April.
Experts say the right time to buy power is in March and April when it is usually the cheapest, and that the real question now is how many companies in the region actually did it.
Talks are underway in Serbia and BiH on how to help companies withstand the high electricity prices
Companies in BiH and Serbia have already sounded the alarm due to the announced 70-135 percent increase in the price of electricity. The talks between power utility Elektroprivreda BiH (EPBiH), the leading supplier in the Federation of BiH, the Government of FBiH, and the Federal Association of Employers have yielded no results, while consultations are underway within the Serbian government on how to help the businesses.
After the meeting, the Federal Association of Employes said the negotiations are set to continue on Monday and that a detailed analysis of the markets of the countries in the region must be prepared before any decision on prices is made.
Mihajlović: Electricity and gas will be available to Serbian consumers at sustainable prices
Admir Andelija, EPBiH CEO, said the increase in prices on exchanges that the company tracks is enormous and that the levels are too high for the corporate sector in FBiH. Adnan Smailbegović, president of UPFBiH, said some firms have already signed supply agreements with a 120% increase. It is unacceptable, he added.
Zorana Mihajlović, Deputy Prime Minister and Minister of Mining and Energy of Serbia said citizens and the country’s economy would have enough gas and electricity at sustainable prices.
Market speculations mostly drive electricity prices
Yesterday the price of electricity on SEEPEX was the highest in Europe – EUR 327 per MWh. Prices above EUR 300 were recorded in seven other countries: Italy, Croatia, Slovenia, Belgium, the Netherlands, Germany, and Austria.
Dejan Stojčevski, chief operating officer of SEEPEX, told Balkan Green Energy News that the price on the exchange is not a benchmark and pointed to the German power exchange, saying it dictates prices throughout Europe.
The price on Serbian power exchange SEEPEX set a record in Europe
The rise from EUR 180 to more than EUR 300 was initiated in the German power exchange, and then it spilled over to other countries and the region, according to Stojčevski. He attributed the surge in Germany to a rise in the price of natural gas by EUR 50, claiming it accounted for EUR 100 per MWh in the electricity price.
Current electricity prices are dictated by the gas prices, which grew ten times to EUR 120 over the past year, while the rise in CO2 prices affected electricity by only EUR 20-30, Stojčevski explained.
The current prices of gas and electricity are unrealistic
In his view, the current prices of gas and electricity are unrealistic and driven by market speculations. However, there is the impact from the rise in demand for gas, primarily in Asia, but also in the EU, due to the transition from coal-fired power plants to gas-fired power plants, as well as from geopolitical games related to the permitting process for the Nord Stream 2 gas pipeline, Stojčevski added.
But there is also a possibility that energy companies want to make up for all the losses they had last year due to the pandemic and the decrease in energy prices, Stojčevski said.
Prices will stabilize at EUR 80-90 over the next three years
Stojčevski expects the electricity price to stabilize at a EUR 80-90 level over the next three years. It will undoubtedly be higher than that next year, and various ups and downs are possible in the next three years, depending predominantly on natural gas, and to some extent to CO2, in his words.
Prices could stabilize in the second quarter of 2022
Stabilization could occur in the second quarter of next year due to lower consumption of gas, and higher production in hydropower plants and wind farms, Stojčevski said.