Record electricity, gas prices: steady supply in the Balkans will depend on coal power plants


Foto: Herbert Aust from Pixabay


August 24, 2022






August 24, 2022





The latest record-breaking prices of electricity and natural gas on European exchanges have dispelled any doubts that countries in the Balkans, and Europe, will be paying dearly for electricity this fall and winter. To make matters worse, in case of any unplanned outages at thermal power plants, such as those seen last winter, not even money will be enough to procure electricity and ensure steady supply.

The costs of electricity on exchanges in France and Germany, as well as gas prices at the Dutch TTF hub, a European benchmark for natural gas trading, hit all-time highs on Monday: 1-year forward electricity prices hit intraday highs of EUR 700-800 per MWh, closing at about EUR 600 on day-ahead markets, while gas jumped to an intraday high of EUR 295 per MWh, closing at EUR 276.

Electricity prices rose due to gas price hikes, which were prompted by Russian energy giant Gazprom’s announcement that it will suspend deliveries via the Nord Stream 1 pipeline for three days after August 31.

The price of natural gas surged from USD 426 to USD 3,360 per 1,000 cubic meters

Since France’s and Germany’s electricity exchanges dictate prices in much of Europe, the prices of electricity on Southeastern European exchanges – Bulgaria’s IBEX, Hungary’s HUPX, Slovenia’s BSP SouthPool, and Serbia’s SEEPEX – rose to similar levels, of more than EUR 600 per MWh.

To grasp the scale of the price hikes, one must keep in mind that before 2021 anything above EUR 75-100 on the European market and above EUR 50-75 on the regional market was considered expensive. The price of natural gas has increased by a whopping 700% since mid-2021, from EUR 35 per MWh to EUR 276 per MWh. The price per 1,000 cubic meters, which is more often used for gas in the Balkan region, has soared from USD 246 to USD 3,360 over the same period.

Stojčevski: electricity prices will only go up

Dejan Stojčevski, Chief Operating Officer of the SEEPEX power exchange, has told Balkan Green Energy News that a very troubled winter is ahead and that it is too late to change anything now.

Everyone who may lack electricity during the upcoming winter should buy it as soon as possible, or, as he points out, “should have already done that.” Prices in the Balkans for the fourth quarter of 2022 and the first quarter of 2023 are currently at around EUR 660, “and they’re not going to go down,” according to him.

The only thing that could lower electricity prices, though not bring them down to the pre-crisis levels, is an end of the war in Ukraine or Germany’s decision to import gas via both Nord Stream 1 and Nord Stream 2.

Steady supply in the Balkans will depend on coal-fired power plants

In its latest report, the European Commission’s Joint Research Centre (JRC) forecasts warmer-than-usual weather in September, October, and November and more severe droughts all over Europe, particularly on the Iberian Peninsula and in Central Europe and the Balkans.

This is definitely not good news, says Stojčevski, noting that the Balkan region relies primarily on coal-fired power plants. They will be critical for ensuring the security of supply in the region and avoiding rotating power outages.

Energy prices could stay at the current levels for several years

When power reserves are low (as is the case in Serbia) and when most countries are facing difficulties procuring electricity for the upcoming period, then all the money in the world would not be enough to buy electricity in case of a breakdown at a major thermal power plant (as was the case in Serbia last winter), according to Stojčevski.

If Germany, which has a major influence on electricity prices around Europe, presses ahead with its efforts to phase out Russian gas, the high energy prices will stay at their current levels for years to come, according to him.

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