Suppliers face dilemma ahead of next week’s NOME auction

Contrary to the situation just a few years ago, independent electricity suppliers now find themselves protected from a gradual rise in wholesale prices as a result of futures contracts offered through the NOME auction procedure. These contracts are offering suppliers protection against market fluctuations.

Aggressive pricing policies by suppliers, especially those not vertically integrated, are not possible amid a market of fluctuating wholesale prices, represented by the System Marginal Price (SMP).

It will be interesting to see if participants will bid up the prices of limited electricity amounts to be offered at next week’s second NOME auction, following the inaugural session last October, amid the market’s current unstable conditions and rising SMP levels.

A total of 145 MWh will be auctioned off at the next NOME auction, scheduled for January 31.

The electricity market’s System Marginal Price (SMP) will today reach a level of 113.77 euros per MWh and remain at a level of over 100 euros for 13 hours, between 9am and 10pm. The day’s price will peak at 8pm when the SMP will reach 200 euros per MWh.

LAGIE (Electricity Market Operator) figures show that the average SMP price for last month shot up to 51.09 euros per MWh, a level not seen since 2015, when the SMP average ranged between 38 and 44 euros all year, expect for January, when it reached 48.70 euros per MWh.

Interestingly, the low SMP prices maintained throughout most of 2016 and the higher prices of December were greatly determined by the natural gas-fueled power stations, which represented 41.8 percent of total production unit operating time, and, to a lesser degree, the lignite-fired stations (33.33%), hydropower units (15.46%), exports (5.24%) and imports (4.17%).

This could mean that the Greek electricity market’s exposure to international gas and oil market price fluctuations is increasing.

Market officials need to try and determine whether today’s local energy market patterns reflect a specific trend or not.