Conditions in Italy, Balkans seen subduing NOME prices

Electricity suppliers taking part in this Wednesday’s second NOME auction for the year believe that appropriate conditions exist for a subdued price in the 30-something euros per MWh range, but unusual factors that would drive the price level to at least 40 euros per MW, which the suppliers hope will be avoided, cannot be ruled out.

The price at the year’s first NOME session reached 41.45 euros per MWh, while the price at the closing sesson for 2017 rose to 45.2 euros per MWh.

Current market conditions in Italy, the Balkans and central Europe – regions to which local NOME participants expect to export some electricity amounts to, permitted by the current NOME rules – are expected to help subdue prices at this Wednesday’s auction.

Normally, electricity prices are not elevated during summer periods, as is reflected by futures contracts covering the next three months.

The large electricity amount to be offered at the April 18 NOME auction, totaling 400 MW/h, is also expected to help keep bidding prices lower. The same amount is also planned for the next session, scheduled for June 18.

In addition, certain suppliers currently hold leftover NOME-related electricity amounts that have remained untilized. Consequent expenses, such as mandatory deposit payments for unused amounts and fines if this non-utilization period exceeds two months, push suppliers to sell excess amounts in the secondary market, even at below-purchase prices.

On the other hand, demand and prices could be driven higher on Wednesday if participants fear limited NOME amounts at future sessions, assuming all proceeds smoothly with the main power utility PPC’s bailout-required disinvestment of lignite units and, as a result, the government reaches an agreement with the lenders for reduced NOME amounts at future auctions.

NOME auctions were introduced in Greece about a year and a half ago to offer independent players access to the state-controlled PPC’s lower-cost lignite and hydropower sources.