Independent producers to be affected by natural gas tax hike

Reduced natural gas price levels have brought about major changes in the electricity market, as highlighted by electricity wholesale market’s day-ahead data. The role of natural gas has developed into a key factor for the stability of the local electricity market.

The drop in natural gas prices has made gas-fueled power stations more competitive, as indicated by their increased role in the shaping of the local System Marginal Price (SMP). Even during peak-demand hours, the SMP level is alternately shaped by lignite-fired stations, previously dominant, and gas-fueled stations.

In March, the SMP average, 40.78 euros per MWh, was the lowest registered over the past 15 months, according to data provided by LAGIE, the Electricity Market Operator. Lignite-fired stations determined the SMP for 36.74 percent of the time, gas-fueled stations factored in with a percentage of 39.3 percent, while, for the remaining period, the SMP was shaped by electricity imports, exports, and, occasionally, by hydropower stations.

Taking the current day as an example to illustrate the development’s practical impact on the market, both lignite and gas-fueled stations will be equally active in the market to cover electricity demand anticipated to be less than 6,300 MW, with the SMP at a level of 47.32 euros.

Meanwhile, market sources have told energypress that the imminent special consumption tax (EFK) hike on natural gas agreed to by government officials and the country’s international lenders will affect independent gas-reliant electricity producers as natural gas costs will increase considerably. However, the level of competitiveness of these units will not change as offers submitted into the energy market’s Day Ahead Scheduling (DAS) do not incorporate the special consumption tax, the sources added.