SEEPEX: Right time for businesses to enter electricity market

With the drop in electricity prices, the need for the government to regulate them is slowly diminishing, experts from Serbian power exchange SEEPEX said and advised domestic companies to secure supply directly from the market. Companies have numerous options like to install solar panels, obtain the status of an active buyer or sign a power purchase agreement (PPA). They bring benefits including long-term price predictability, according to the speakers at a workshop organized by SEEPEX and the Chamber of Commerce and Industry.

Representatives of 98 companies and thirty faculties, ministries, regulatory institutions, consulting and law firms gathered at the event. The great interest demonstrated by companies is also related to the fact that the power price cap for businesses in Serbia expires on April 30. The government set it at EUR 120 per MWh.

Currently, the price of electricity on the SEEPEX is EUR 80 per MWh, much lower than the average EUR 270 per MWh from the peak of the energy crisis in 2022. If inflation and the increase in prices of CO2 allowances are added to the pre-crisis average price of EUR 50 per MWh, in 2019, EUR 80 per MWh isn’t high.

SEEPEX CEO Miloš Mladenović said the energy transition has completely changed the way the sector works and that for energy buyers it means, for example, that they have become active participants in the market.

New markets are developing, demand response is becoming increasingly important, there are new models for financing investments in green energy, the feed-in tariff era has passed, and the number of PPA contracts is growing.

“We already had firms on the market before the crisis, but with the stabilization of prices, this is becoming more important,” Mladenović said.

German 2025-2027 power futures range from EUR 70 per MWh to EUR 60 per MWh

According to Chief Operating Officer of SEEPEX Dejan Stojčevski, the power bourse operator aims to couple the Serbian electricity market with the single European electricity market.

It would improve the conditions the industry to enter the market, he added.

Stojčevski stressed that electricity prices have stabilized after the turmoil caused by COVID-19 pandemic and the war in Ukraine.

As for the current price on SEEPEX, of EUR 80 per MWh, he expressed the belief that EUR 90 per MWh to EUR 110 per MWh is a more realistic level, though only without any major disturbances. The price is dictated by natural gas, Stojčevski added.

Stojčevski: Build solar panels wherever you can

Hungarian power futures for the second, third and fourth quarters of 2024 range from EUR 57 per MWh to EUR 81 per MWh, compared to EUR 52 per MWh to EUR 73 per MWh in Germany. German futures for 2025-2027 trade for EUR 70 per MWh to EUR 60 per MWh.

Stojčevski advised large commercial and industrial consumers to participate in the market without intermediaries or suppliers, arguing it would secure them a better price.

He also encouraged businesses to use every free surface they have to install solar panels. Apart from producing electricity for self-consumption, firms can sell the surplus quantities or provide balancing or flexibility services, Stojčevski said.

However, he stressed that in the long term, solar is not the right solution if it is not accompanied by batteries or other kinds of energy storage.

Mladenović: Now is the right time for PPA contracts

SEEPEX CEO Miloš Mladenović backed his colleague’s advice to set up solar power panels. In addition, he said it is better for a firm to change its status from prosumer to active buyer.

It gives companies new opportunities such as selling surplus electricity on the market or providing flexibility services.

He also highlighted PPAs as a solution for firms to contract electricity supply. They help investors make their projects bankable, replacing the role of feed-in tariff support in financing, Mladenović explained.

Serbia has a regulatory framework for PPA contracts

He noted that PPAs were already signed in Serbia for the Krivača wind farm and DeLasol photovoltaic facility. The country has a regulatory framework in place for such agreements, he stressed.

PPAs are already common contracts

According to Mladenović, a PPAs is now a common business deal with various options and models developed.

The price for the buyer depends on how the risk is distributed, but he expressed the belief that the market price cannot be lower than under a PPA. Therefore, it is much better for businesses to enter such an arrangement, he stressed.

Now is the right moment, if not to sign the PPA contract, then to start thinking about it, Mladenović stressed.

The total capacity of contracted PPAs in Europe has increased by 37% since 2018, and their number by 52%. Analysts believe that the golden era of PPAs has started.